Dont Let Your Personal Loan Become A Personal Moan

Don't Let Your Personal Loan Become a​ Personal Moan
Most of​ us have been in​ a​ position at​ some point when we simply have had insufficient funds to​ pay for something .​
This could be car insurance/repairs,​ course fees,​ holiday,​ Christmas presents,​ electrical items or​ even the​ weekly shopping .​
According to​ Credit Action,​ 2.4 million personal loan agreements were recorded in​ the​ first quarter of​ 2018,​ totalling £13.5 billion .​
The national debt education charity reported that 30% of​ the​ personal loans were for cars,​ 24% for home improvements and 20% for debt consolidation .​
The total outstanding balance for personal loans reached £93 billion by March 2018.
Personal loans can help you​ out of​ a​ difficult period when cash-flow is​ restricted,​ but don’t go for the​ first one you​ find or​ you​ may find that your loan becomes a​ lifetime commitment and lifetime strain .​
There are numerous personal finance comparison websites available for personal loans including moneynet,​ moneyfacts and lowermybills.
In their consumer loans guide,​ moneynet advise that as​ a​ general rule of​ thumb,​ the​ more you​ borrow – the​ cheaper the​ rate of​ interest .​
For example,​ a​ loan of​ £1,​000 may carry an​ interest rate as​ high as​ 20% - reportedly justified by the​ lenders because of​ the​ relatively high administration costs associated with arranging a​ loan .​
For larger personal loans,​ lenders might only charge interest rates of​ around 6%.
Personal loans fall into two categories: secured and unsecured .​
Unsecured personal loans are the​ most popular,​ as​ secured loans may jeopardise the​ borrower’s property or​ other asset .​
Secured loans are arranged on​ the​ assumption that the​ borrower puts up a​ form of​ security to​ the​ lender,​ typically the​ borrower’s property .​
This allows the​ lender to​ take ownership of​ the​ asset should loan repayments be jeopardised .​
Whilst the​ prospect of​ losing your home may seem like a​ major disadvantage,​ the​ benefits of​ a​ secured loan often allow you​ to​ borrow more money at​ a​ lower rate of​ interest.
Despite such benefits however,​ most people are reluctant to​ lose their home and therefore take out unsecured loans because of​ this.
When reviewing personal loans and researching the​ cheapest loan on​ offer,​ you​ should be aware that you​ need to​ investigate the​ terms and conditions,​ as​ well as​ the​ annual percentage rate (APR) .​
Note that if​ your credit history is​ poor – then the​ terms of​ the​ loan may reflect this .​
Do your homework on​ redemption penalties and any other charges which might be associated with your loan .​
Some lenders will also offer payment breaks (deferred payment) either at​ the​ beginning of​ the​ loan period,​ or​ perhaps during the​ term,​ but again read the​ terms and conditions and check that excessive interest will not accumulate over any break periods.
Personal loans in​ the​ UK are governed by the​ Consumer Credit Act 1974,​ but remember that you​ are ultimately responsible for borrowing a​ given sum of​ money and that once you​ sign a​ credit agreement,​ you​ are bound by the​ terms and conditions.
If you​ are finding the​ repayments challenging,​ always tell the​ lender as​ soon as​ possible and remember that any loan repayment problems are likely to​ be captured in​ your credit record/history,​ which will later impact on​ any other borrowing.
Resources:
www.moneynet.co.uk/loans/index.shtml (loan comparisons)
www.moneynet.co.uk/personal-loan-guide/index.shtml (personal loan guide)
Dont Let Your Personal Loan Become A Personal Moan Dont Let Your Personal Loan Become A Personal Moan Reviewed by Henda Yesti on August 07, 2018 Rating: 5

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