Are you thinking of taking out a personal loan? Taking out loans can be a risky business, depending on your situation and the kind of loan you plan to take out. It isn’t a good idea to go taking out loans willy nilly – some thought must be put into the process first, so you don’t end up getting yourself in an even bigger pickle. To help you make the right decision, we have some tips for you to follow:
Do Your Research and Shop Around
Just as if you were buying a physical product, you should shop around to try and get the best deals. Comparing the APR tells the true cost of a loan, by taking into account the interest payable and any other charges you’ll have to fork out for. We recommend Buddyloans for a quick and simple way to get the money you need.
Read the Small Print
Before you even try to apply for a loan, check the small to make sure you’re eligible for it. Applying for some loans will have certain conditions, but if you don’t fit the bill and apply you run the risk of affecting your credit rating.
Consider Charges for Early Repayment
There’s every chance that you’ll be able to pay off your debt early, regardless of how unlikely it seems to you now. However, some loan providers insist on an extra charge if you do want to pay off your debt early. Check how much this will cost before you apply for a certain deal.
Shop Around for PPI
PPI does have bad press, but it can be useful. It’s designed specifically to cover your monthly loan or credit card payments should you become sick or unemployed. Shopping around for the cheapest deal is very important when it comes to PPI.
Check Your Credit Rating
It’s essential that you check your credit rating before applying for a market leading personal loan. If your credit rating isn’t in very good shape, you might end up being offered a more expensive deal that the low rate you applied for.
Think About Getting a Credit Card
Other forms of credit might be more suitable than a personal loan. Some credit cards have a 0% introductory offer on purchases so you can spread the cost of a big purchase, with no interest added on. The longest deal you can find now is a 0% deal for 16 months from Tesco bank.
Borrow More Money Than You Need
Sometimes, borrowing more money than you need can work out cheaper in the long run, due to lower APR’s. For example, in certain cases borrowing an extra £500 can save you over £800 over the course of 60 months.
Don’t Apply For Too Many Loans
Many applicants will leave a footprint on your credit record, meaning that whenever you apply for a loan, the fact that you were declined can affect your credit score. By having lots of applications on your record, you run the risk of looking desperate or having financial troubles.
You should only take out a personal loan if you’re sure it’s the right thing for your situation. Follow our advice and you’ll be doing your bank balance a favour!