When you need cash to cover unplanned expenses or to consolidate your high interest debt, one option is to take out a personal loan. Lenders who issue personal loans typically take your credit history and income into account when deciding whether or not to approve the loan.

To get the most from your personal loan, you need to know what things you need to avoid when applying with prospective lenders. Here are three things you should avoid at all costs when shopping for a personal loan.

1. Loan Fees

Some lenders charge their customers loan fees simply for the privilege of taking out a loan. These fees might be listed as origination fees or annual fees. Understand that these fees are not interest on the amount that you borrow; they are additional charges levied by the lender.

Regardless of how the lender labels them, if a loan is riddled with fees, it is best to move on to another lender. Loan fees will increase the cost of the loan and the amount that you ultimately have to pay in order to retire the loan.

2. Prepayment Penalties

If you encounter a loan that has a prepayment penalty, you should look elsewhere for your personal loan. A prepayment penalty is a fee that the lender charges if you decide to pay your loan off before the scheduled end date. The prepayment penalty may be equal to a certain amount of loan interest or it may be a fixed amount.

Some borrowers disregard prepayment penalties because they have no plans to pay the loan off before the maturity date. However, remember that your circumstances can change. 

Perhaps you lose your job and need to cut your fixed monthly expenses. Paying a loan off early is one way to do so. Or, maybe you receive an unexpected bonus at work. You want to use it responsibly to pay down your debt. Don't utilize a lender that will punish you for paying your loan off early.

3. Loan Insurance

Loan insurance is an optional product that you can add to your loan. If you lose your job or become disabled, the insurance will make your monthly payment until you return to work. Some policies also include death in their coverage. The cost depends on the amount of your loan's outstanding balance.

Unfortunately, loan insurance is often an expensive product for the level of protection that it provides. It is more economical to use the money that you would have spent on insurance for your personal loan and use it to buy life insurance and disability insurance. For more information, contact a company like American Cash Advance and Title Loan.