If you have never taken out a loan, you may well be confused about the plethora of products available from a huge range of lenders. Before applying, take some time to consider some of the keys factors associated with borrowing in the way.
There are two main types of loan. You can opt for unsecured (also known as unsecured personal loans) or secured loans (sometimes referred to as homeowner loans).
Unsecured Personal loans tend to be more appropriate if you are only looking to borrow a relatively small amount of cash – say up to £25,000. If you decide to go for a secured loan, you do need to remember that this will be secured against your home should you go on to default. The minimum size of a loan of this type is normally around £10,000, and in certain circumstances you may be able to borrow up to £250,000, although borrowing a sum this high will often only be possible if you have a good level of equity in your property.
Find Unsecured loan vendors at Click Finance: https://www.clickfinancial.co.uk/unsecured-loans/
While you may see some deals advertised on the high street that seem very reasonable, bear in mind that you may not be eligible for that particular rate. Around a third of all applicants are likely to be offered a rate that is significantly higher. The very lowest rates will be reserved for those applicants with a clean credit history and high credit score.
It might seem obvious, but it is vital to remember that the longer the repayment term, the more money you will be repaying in terms of interest. The level of your repayments will be dependent on both the amount of cash you need to raise, but also the time frame over which you wish to repay it to the lender.
What to Consider About a Loan
While you can lower how much you repay each month by extending the term, this will work out to be more expensive over the long term as the interest will continue to accrue.
It is always best to calculate the optimum loan term by working out exactly how much you can afford to repay every month, factoring in a contingency budget if at all possible. If you only need to borrow money over a short time frame, it may be better to look at taking out a credit card. However, you should only consider this as a viable option if you are eligible for a 0% interest card. Borrowing at a higher rate of interest will probably work out to be more costly, even in the short term.
If you do get accepted for a new credit card, it is essential that you don’t get tempted into running up a new balance. Remember that at the end of the introductory period the interest will revert to a standard rate, and your repayments will increase significantly. It is normally a good idea to transfer the balance of your debts and then cut the card up to make it easier to resist the temptation to spend any further.