Ten Top Tips For Choosing Personal Loans

Ten Top Tips For Choosing Personal Loans
Choosing the​ right personal loan for your needs can be tricky,​ and if​ don’t know what you​ are getting yourself into then you​ could end up in​ financial difficulties .​
Here are some top tips to​ use when choosing a​ personal loan:
Secured vs .​
unsecured
A secured loan is​ a​ loan that is​ secured against collateral,​ such as​ your home .​
Secured loans have better rates than unsecured loans,​ but they are more risky because you​ could lose your home if​ the​ repayments are not met .​
If you​ are borrowing a​ small amount of​ money and have good credit,​ then go for unsecured loans.
Borrow as​ little as​ you​ can over a​ short period
The more money you​ borrow over a​ longer period of​ time,​ the​ more interest you​ are going to​ pay .​
Borrow as​ little as​ you​ can afford to,​ and pay it​ back as​ quickly as​ you​ can so that you​ minimise the​ interest payments.
Fixed vs .​
variable
Most personal loans have fixed interest rates .​
This means that the​ monthly repayments will remain the​ same throughout the​ loan period .​
However,​ some lenders offer variable or​ flexible loans .​
These loans are good if​ the​ rate goes down,​ but remember budget for the​ rate going up as​ well .​
APR
APR or​ Annual Percentage Rates determine the​ amount of​ interest you​ pay yearly on​ the​ loan .​
Although a​ low APR might seem appealing,​ be careful because this is​ not the​ only charge that you​ are liable for when paying back your loan .​
Typical APR
If you​ are comparing APR,​ then it​ is​ good to​ understand the​ concept of​ ‘typical’ APR .​
Although you​ may qualify for this rate,​ it​ pays to​ remember that unless your credit history is​ good,​ you​ will end up paying a​ higher APR than the​ typical advertised rate.
TAR
A better way to​ look at​ how much a​ loan will cost is​ the​ TAR or​ Total Amount Repayable .​
This will show you​ exactly how much you​ will repay to​ the​ lender .​
The lower the​ TAR then the​ better the​ overall package is​ .​
Shop around
The most important thing to​ do before getting a​ loan is​ to​ shop around .​
Before you​ sign anything,​ make sure that you​ have looked at​ all possibilities for your needs .​
If you​ can separate all the​ various features of​ a​ loan and concentrate on​ the​ features you​ require,​ you​ can find the​ best rates for your needs.
Look online
Although your bank may have a​ good deal,​ most of​ the​ best loan deals are to​ be found online because of​ the​ low overhead costs associated with online companies .​
You can find many web sites that will allow you​ to​ compare the​ best personal loan prices,​ helping you​ to​ get the​ best deal for your needs.
Beware of​ PPI
When securing a​ loan,​ it​ is​ likely that you​ will be offered PPI or​ Payment Protection Insurance .​
This insurance covers your payments in​ case of​ illness,​ accident or​ unemployment .​
Although this insurance may help you,​ very few people are eligible to​ claim under its terms,​ and it​ is​ very expensive .​
Look to​ see if​ your current employer covers some of​ these items,​ or​ find a​ cheaper stand-alone policy that will cover you.
Early settlement
Nearly three quarters of​ all loans are paid off early,​ so it​ pays to​ know the​ charges for doing so .​
Although charges can still be high,​ more and more lenders are scrapping the​ charges altogether .​
Finding a​ lender that does not charge for early repayment might save you​ a​ lot of​ money.
Ten Top Tips For Choosing Personal Loans Ten Top Tips For Choosing Personal Loans Reviewed by Henda Yesti on August 13, 2018 Rating: 5

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