Top Ten Tips - Personal Loans

Have you considered! or are considering a personal loan - then you may well want to take a look at out top ten tips for personal loans 

  1. Broadly speaking there are two types of personal loan - Secured Loans and Unsecured Loans. Secured Loans (some times called home owner loans) are a type of personal loan where the lender takes a charge over your property as security for the loan. They are often easier to obtain than unsecured loans and can be offered for larger amounts over longer periods. Unsecured loans are where the lender has no security in the form of a charge over property and is lending you the money based on your track record of making payments.
  2. Personal Loans can be used for many purposes for example, holidays, home improvements, new car or debt consolidation to name a few. However cannot be used for business purposes.Personal Loans
  3. The interest rate you have to pay when taking out a personal loan depends heavily on your credit score. It is a good idea to check your credit file to ensure you know what type of rate to expect. The rates that lenders advertise on the television or on billboards are usually the best rates that they can offer to people with excellent track records of making paying payments. If you have had credit problem in the past, expect your rate to be higher.
  4. Many companies advertise “debt-consolidation loans.” Although these types of loans are useful if you have large amounts of credit with different lenders, remember that if your monthly payments are only lower because you are borrowing the money over a longer period it is likely you will pay more overall.
  5. Shop around, use the Internet, press and visit different banks, especially your current bank as you have an existing relationship they may be able to offer more preferential rates.
  6. Many loans come with the option of taking payment protection, a type of insurance designed to cover your payments should lose your job or become able to work. This built in insurance is usually very expensive and banks will often try hard to sell it to you. Consult an independent adviser if you are unsure as external insurance policies are often far cheaper.
  7. Think about your budget when taking out a loan, how much can you afford to pay? It is best to pay the loan off as soon as you can to avoid paying too much interest over the long term, however do not over-commit yourself. Failure to make payments on any types of credit can have an adverse effect on your credit score and if the loan is secured against your home, that make be at risk too as the lender can apply to force you sell your home to repay any amounts owed to them.
  8. When comparing which loan to apply for, take note of the APR (Annual Percentage Rate) this figure allows you to directly compare the cost of one loan to another, this not only takes in account the interest rate of the loan but another underlying fees the lender may be charging for giving you the loan.
  9. If you are finding it difficult to repay a loan, do not bury your head in the sand, falling behind on loan payments is detrimental to your credit file. It is always best to contact the lender as soon as possible and they will help you come to an arrangement to pay what you can afford. Always address these types of issues early to avoid unnecessary charges.
  10. Loans under £25,000 are regulated under the Consumer Credit Act. You can find more information about credit at www.consumerdirect.gov.uk

 Gary Taylor - Search and Apply

“ For information purposes only. It does not constitute advice, and therefore cannot be relied upon as such.”

 

Design and hosting by sites4biz.co.uk