Take out your second personal loan? Here are the pros and cons of using the same lender again
Using the same lender again could be a mixed bag.
- You may need to take out more than one personal loan in your lifetime.
- While using your original lender may seem like the best solution, that’s not necessarily the case.
- It’s worth researching a lender to find the best rates and fees.
When you need to borrow money, your goal should be to pay as little interest as possible on that amount. And a personal loan might be your best bet.
Personal loan rates tend to be competitive – and considerably lower than the interest rates you’ll pay on a credit card balance. Personal loans also tend to close quickly. In some cases, you can get your money within days of an application being approved.
Another advantage of personal loans is flexibility. You can use the proceeds of a personal loan for anything, whether it’s fixing your home or starting a business.
Now, you may already be familiar with personal loans because you have taken out one in the past. If the need to borrow money arises again, you may be tempted to work with the same lender you originally used.
It’s not necessarily a bad choice, but it’s not necessarily the right one either. Here are some of the pros and cons of using the same personal lender again.
Advantage #1: you know what to expect
Each lender has a slightly different process when it comes to applying for and qualifying for a personal loan. If you’re using a lender you’ve worked with before, you may find the process less stressful because you’ve been through it before and know what to expect.
Advantage #2: You can get a better rate as a regular borrower
Being a regular borrower will not guarantee you a competitive rate on a personal loan. But if your credit score is solid and you’re a good candidate, it more the fact that you have already worked with your lender could pave the way for a very good deal.
Con #1: Your lender may not have the best rates
Just because you have a pre-existing relationship with a lender doesn’t mean they have the best deal in town. It’s important to shop around while getting a personal loan because you may find that another lender is able to give you an even better deal. Incidentally, it’s something worth doing any every time you borrow money, whether it’s a personal loan, mortgage or home equity loan.
Con #2: Your Lender Might Charge Higher Fees
When you take out a personal loan, different fees come into play, such as origination fees and application fees. These fees are generally at the discretion of your lender – and yours may charge a higher fee than another. When exploring personal loan options, it’s important to look beyond the interest rate on your loan and consider the costs of obtaining it. You may find that it’s worth working with a lender with a slightly higher interest rate because you’ll pay less in fees.
What’s the right call?
It’s natural to assume that working with the same personal lender again is your best bet. But that may not be the case. Spend some time researching so you can be sure you get a competitive personal loan offer no matter who you end up signing with.
The Ascent’s Best Personal Loans for 2022
Our team of independent experts have pored over the fine print to find the select personal loans that offer competitive rates and low fees. Start by reviewing The Ascent’s best personal loans for 2022.