5 personal loan mistakes that could cost you money

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Versatility. It’s one of the chief attributes that can make a personal loan attractive.

You can use it to consolidate debt, finance a vacation or build a new addition on your home. But it’s not free money, so you should take seriously your decision to apply and investigate options before making a decision, says Tara Alderete, director of education for ClearPoint Credit Counseling Solutions, based in Atlanta.

“When you’re seeking a personal loan, think about why. What’s your goal? What do you want to do?” she says. If you can accomplish your goal by budgeting for it, that’s better than taking out a loan.

But if you decide a loan is necessary, don’t make a decision in haste. That can prevent you from getting the cheapest financing available to you. It also could mean lenders will reject your application.

Avoid these 5 mistakes to improve your chances of getting a loan that’s right for you — and to keep your finances healthy afterward.

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