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An Introduction To Personal Loans

It seems there are a million different ways to borrow money out there. You’ve only got to walk down the high street or browse the internet and you will be inundated with companies offering you money.

But what type of loan do you need? If you want a relatively small amount, say £5,000, you will want a personal loan… won’t you?

What’s the basics about Personal Loans?

Although it’s difficult to tell what makes a personal loan “personal” as opposed to a standard loan, it does appear that generally lending institutions apply the label “personal” to loans that are put to personal uses. These would include a new car, a holiday, private hospital treatment, but then again, many institutions which advertise personal loans change their label to “homeowners” loan. All in all, it can be quite confusing, but the labels don’t really matter.

To be secure or not secure?

In general, we regard a personal loan as a loan that is for non-business use and is unsecured.

Different companies will have different levels at which they will insist on security for your loan. This is when they want something such as your house that they can sell if you stop paying your monthly repayments. It’s their way of getting their money back.

Quite often unsecured loans are used for buying things like cars and in these instances the lenders know they can get their money back by taking the car if you break the rules of the loan agreement. This will be written in the terms and conditions, so always check the small print.

Best Loan rate

Although there is a huge choice of companies offering loans at different rates people still tend to think they can only borrow from their regular High Street financial institution. This leads to people who have banked with one bank for some years just asking them for a loan without shopping around.

If you want value, shop around for a loan, just as you would if you were buying anything else. For personal loans you don’t need to go to a bank, there are many online institutions like Cahoot who will assess your financial situation and lend money to you accordingly.

The whole financial industry was completely changed in the nineteen eighties when the Chancellor decided to encourage competition, so money became just like other retail services. … for better or for worse.

Shopping around for the best rate can save you thousands over a longer term loan; don’t just settle for the first quote, ask several before deciding which one to apply for. Examine the APR and use that figure to make your comparisons. All companies are required by law to show this figure as comparative performance over the term of their loans.

For life

Easy availability of money to borrow has made us into a society of debtors. You can get personal loans for almost anything, but the downside is you can get a huge number of loans and lose track of how much you have got to repay. Almost as easily as running up debt on credit cards you can find yourself in a tricky financial spot. Borrowing more isn’t the answer. Careful considered borrowing in the first place, is.

Personal loans are often for quite short periods, maybe up to 7 years or so. Usually the lender will offer you the choice of how much you want to borrow and over how long a period. You can then work out on your monthly income budget how much you can afford and calculate how much you want that loan to cost. The interest rate on a personal loan will remain the same throughout the life of the loan and generally speaking the longer the term you take the loan out for, the more it will cost you.

Dodgy Loans inc

If you can’t get a loan from a reputable High Street lender or Internet finance house that you have heard of it is extremely unwise to approach money lenders who advertise in the local paper or telephone directories. If you need money that bad, try approaching Citizens Advice or even the Samaritans to explain your financial predicament and see if they can help.

Personal loans from un-licensed back street boys will be very, very expensive and can lead you into a situation you would far rather not be in.

High Street Loans Happy

These days even supermarkets offer personal loans. Why not start there for your first loan quote while you do you weekly shop for groceries?

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Posted on: [ November 03, 2017 ]       Add to   Digg it   Add to Blinklist   Add to FUrl   StumbleUpon