How to get a fair deal on a personal loan
When you need some cash to fund a new car, or maybe a new kitchen and bathroom, landscape a garden that looks like a jungle or pay for your child’s wedding, or to fund your dream of taking a trip around the world a personal loan is likely to be something that you look into as a decent way to finance your plans.
That’s a sensible decision, sure enough, but rather than getting carried away and jumping at the first offer you come across take a little time to look around, get prepared, and find a fair deal that works for you. Here are our top tips on how to do just that.
Tip 1 – Get to know your credit rating
There are plenty of free sites around that let you check your credit score, and it’s vital you do as people labelled high risk will find it harder to get any kind of fair personal loan, leaving payday and other very high interest loans as the only option. Check the information on your credit report is accurate, and make sure you are on the electoral register as that helps prove you are real. If the score is pretty bad look online for advice on how to reduce it.
Tip 2 – Don’t take good interest rates for granted
It’s common practice for a loan to be advertised at a particular rate, but the actual terms of a loan often depends on how much is being borrowed and for how long. Ask for the final figure before making a decision.
Tip 3 – Avoid applying for several loans in a row
Each application will be recorded on your credit report and make you look desperate, which of course suggests you a worse risk. Before applying use a free online tool to check which ones are your best bet, then apply for one at a time.
Tip 4 – Don’t use payday loan companies
Those loans were originally designed to simply bridge the gap between payday and an emergency, so they are short term and have a very high interest rate as a result. There are other places which focus on lending to those with bad debt, and although the rates aren’t super competitive they are not as extortionate either.
Tip 5 – Look beyond your own bank
While it may seem natural to approach your usual bank there’s no guarantee that they will either lend you the cash, or have the best interest rates. These days it’s perfectly acceptable to shop around, so loyalty doesn’t automatically pay. There are plenty of financial institutions offering emergency loans online who may be able to offer a loan at rates comparable to or better than your bank and potentially in a shorter amount of time and they should not be discounted.
Tip 6 – Be realistic about repayments
In most cases the longer the term of the loan is the more interest you will pay, but you need to balance that against what you can afford to pay back every month. It’s not a bad idea to cut down on some non-essentials to cover part of the loan repayment, but if things are so tight you start missing payments (or other expenses like your rent/mortgage) as a result then you will only make things worse.
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