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Loans choosing the right personal loan to save money
There’s a huge range of personal loans to choose from and finding the best deal to suit your needs can seem daunting. There are lots of reasons why people need to borrow money – some people take out a loan for their new car or wedding, whilst others simply want to consolidate their debts into one monthly payment. Whatever your needs, you can save yourself a lot of money by choosing the right loan, so here we outline some of the things you should know before making a decision.
Unsecured or secured?
Taking out a secured loan means that your home could be at risk if you don’t keep up repayments, as you are effectively giving the lender the right to take ownership if you can’t repay the debt.
Many people opt instead for unsecured loans, as they don’t want to risk putting their home on the line. Bear in mind, though, that interest rates on unsecured deals generally tend to be a bit higher than those on secured loans.
If you can’t repay an unsecured loan then you could still end up with a black mark against your credit record or worse. So, whichever type of loan you choose, the monthly payments must be affordable.
How much will the loan cost?
The larger the sum of money you are borrowing, the lower the interest rate usually is, and vice versa.
Most loan providers will allow you to borrow up to £20,000, which you can choose to repay from between six months and 10 years.
Longer repayment periods mean the monthly payments will be lower. But, of course, you will ultimately end up paying more in interest than if you go for a shorter term loan.
When picking any loan, whatever the term, make sure you find out exactly how much you will pay back in total.
Don’t overstretch yourself. Even though you might end up paying more if you repay the loan over a longer period, if this is the only way payments will be manageable then this is likely to be the best option for you.
Shopping around is vital if you want to find the best deals, and with Beat That Quote you can compare many loans available.
Why aren’t I offered the rate I’ve seen advertised?
Lenders usually only advertise the ‘typical’ rate they offer, which is the rate that is offered to the majority of applicants.
However, you may be offered a higher rate, for example, depending on your credit history and whether you have had any problems meeting payments in the past.
If you have an excellent credit record and have never defaulted on any payments, the chances are you will be offered the most competitive rate the lender offers.
Can I pay my loan off early?
Yes, you can, although repaying your loan before the end of its term may actually end up costing rather than saving you money. This is because some loans charge an early repayment penalty, which is often equivalent to the cost of a couple of months’ interest.
So, if you think you might be able to pay off your debt early, then check to see if the loan you are interested in applies a charge for doing so.
Finally…
The golden rule is to do your homework before taking out a loan and Beat That Quote can help.
Know how much you can afford to repay each month, and how long it will take you to clear the loan.
Don’t just go for the first offer you find – use this site to shop around and you might be surprised at how much money you can save.
Compare cheap loans now
2008-04-27
