Almost everyone will need to take out a loan of one form or another in their life. It's a lump sum which you borrow from a lending company, and pay back in monthly instalments over a number of years, with a little extra to cover the interest.
Well, in an ideal world that's what happens. Unfortunately, the reality is a little more complicated. First of all, the type of loan you get will depend on your circumstances, the amount you require, your credit rating and which company you apply to.
Personal loans are available to tenants and homeowners with a satisfactory credit score, and are generally taken out over periods of up to 10 years. A secured loan is only available to homeowners, and can be taken out over a longer period of time than a personal loan, and can be for a larger amount. This is because your home is put up as security against a secured loan, so defaulting on payments means the lender can seize your house to cover your debt. With a personal loan, the lender has no such security so the interest rates tend to be higher and people with a less than perfect score are less likely to be approved for them.
Looking for a suitable loan with good rates can be like finding a needle in a haystack. Many people looking for loans will apply to the first company they find with a good typical APR, and never realise that they may get a better deal with a different company. On the other hand, some apply to dozens of different companies in the hope of finding the best deal, and forget that each credit search goes on their credit file, and can be detrimental to their score. It's best to just look around for two or three companies with the lowest typical APR, and apply to those.
Remember that the typical APR a company advertises isn't necessarily the APR you will get if you take a loan with them. The APR depends on your individual score and can vary enormously between borrowers. The APR can increase your repayments quite significantly, so if you are quoted a high rate, try to take your loan out over the shortest possible period to cut down the amount of interest you'll end up paying.
You can cut your repayments down further by avoiding unnecessary payment protection insurance. This is sometimes added to the loan without the borrower being aware of it, and can account for quite a substantial percentage of the repayments. Always check with the lender when confirming a quote, and read the small print before signing any contracts. Never be afraid to tell the lender you don't want PPI. You may believe it is compulsory with a loan, but it isn't. There are independent insurance providers who can give you a much better deal on PPI if you really feel you should have it.
One thing to check before taking out a loan is a settlement charge. Especially for loans taken over a long period, there may be a hefty fee payable if you wish to settle early; this usually equates to one month's interest. If you think there may be a chance you could settle early, try to go for a loan with little or no early settlement penalties.
Finally, don't get greedy and take out a loan for more than you need, or can afford to repay. With a personal loan you could be pursued to the courts if you default on payments, and a secured loan could cost you your house in the event of numerous non-payments. Be aware how much you can comfortably afford on a repayment each month, and borrow according to that.
With literally hundreds of credit cards at your disposable, choosing the one that's right for your lifestyle can be a daunting task. You always want to ensure you get a credit card that meets your needs while offering the best rates and the biggest rewards. You can search dozens of local banks and lending institutions, scour the internet, or randomly select a credit card OR you can use our convenient online credit card comparison tool to find exactly the card that's best for you. Our credit card comparison tool will allow you to view credit card details side-by-side in an easy to understand cross grid. You can even select a card and approve online, in some cases being approved within minutes of submission! It truly is the smart way to shop for credit cards!
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