Personal loans allow you to borrow a fixed amount of money for a set period of time. This makes them really popular, because they’re easy to understand, easy to repay, and they often offer a good rate of interest. Whether you’re improving your home, or investing in a more reliable car for your commute to a new job, a personal loan often makes more sense than juggling a large sum of money between overdrafts and credit cards.
Where Is The Easiest Place To Apply?
Your first port of call for a loan would have been the bank or building society, but these days, there are literally hundreds of loan companies that mostly advertise online, and even large supermarket chains are now offering their own personal loan products, although these are often backed by larger financial organisations.
What Will I Have To Pay?
You’ll pay a pre determined amount of interest on what you borrow. This amount is usually fixed. For example, you might wish to borrow £5,000 over 5 years. You’ll pay back the money in monthly instalments at a rate of perhaps 7% a year. If you decide to pay the loan back early, you could be charged a penalty fee.
How Much Will I Be Able To Borrow?
It goes without saying that you should check how much you can afford to repay each month before you take out a loan. Most lenders will allow you to borrow up to around £10,000, but this will vary depending on your disposable income and credit history. The only way to borrow a higher amount than this is to secure the loan against something of value, typically your home, although this isn’t standard practice for smaller amounts.
How Long Will It Take To Repay?
You choose the length of time you’d like to repay the loan over. The maximum time is usually 5 years, although if you’re able to pay off the loan sooner, you’ll pay less interest. The downside of quicker repayment is that it will take a large sum of your monthly budget to pay off each month.
Be Sure To Shop Around
The best place to go for a loan isn’t necessarily the bank. You should definitely compare the different products before you jump in and borrow, A comparison website can help with this: Sites like Loans Direct compare the rates and services from hundreds of providers at once, so you’ll save a lot of time. There is a fee for using the site, but Loans Direct refunds your cash if you’re unhappy with the service.
Once you’ve found a comparison website, don’t automatically head to the cheapest loan provider. Do a detailed search and decide what terms and conditions best suit your situation. Find out about late payment charges and if it’s possible to settle the loan early. Take your time and find the features you need.
Personal loans offer a manageable and cost effective means of borrowing the funds you need. Do your research, take your time, and you’ll find a great deal with an easy repayment scheme.
Wendy Lin is a writer, painter and businesswoman. She is enjoying her life in the countryside of England after moving from the busyness of Los Angeles.
