If you are thinking of taking out a loan to consolidate existing debts or make a large purchase such as a new kitchen or car, it’s important to ensure you are choosing the best loan for your needs. Unsecured loans are a popular way of borrowing money and as a result there’s no shortage of products on the market. But making a poor choice when selecting your loan could lead to you paying back much more in interest over its term.
Before you can find the best loan for your needs, you must first establish how much you will be able to borrow. Most providers of unsecured loans offer amount up to 15,000 and some will offer as much as 25,000, depending on their criteria and your personal circumstances. It has become more difficult to get approved for a personal loan in recent years, but those with a good credit rating can still generally find a range of lenders to choose from. There are also a number of specialist lenders on the market for those who need to rebuild their credit score and loan decisions are often available on the same day that you make the application.
The repayment period will depend on the amount you borrow, but will typically range from 3-10 years. The longer you take to repay the loan, the more interest you will pay, so it may be wise to look for a loan that allows you to make overpayments if you wish to try and repay early to save on interest charges.
What to Look for When considering a loan
Ensure you read the terms and conditions thoroughly and speak to an adviser if you have any questions. Your goal is to secure the best loan possible and this is not only about getting the lowest interest rate.
Find out if there is a fee for repaying the loan early, if you can make additional monthly payment and whether there is a cap on how often you can overpay. Additionally, check what fees are charged for late or missed payments as you never know how your circumstances may change during the term of the loan.
Consider whether the loan comes with optional payment protection insurance and whether or not you need this add-on. Some people will already have insurance in place that would cover their bills if they became sick or lost their job, so they would not require any additional insurance. Check if any company you have a financial relationship with, such as your bank or credit-card provider, offers a preferential rate for existing customers, but don’t always assume their preferential rate is better than what’s on offer in the open market.
Think about what you want to use the loan for. You may be able to get a better deal by looking at an alternative type of lending, such as arranging finance for a new car directly with the dealer. Where to Get, a Loan Try to ensure you only apply to reputable companies that have a good reputation and take some time to read customer reviews. Avoid small, obscure companies which have not been trading long or give you any hint of concern.
There is a broad range of lenders on the market, so it’s usually better to use a comparison site such as Money Supermarket, which enables you to quickly compare lenders and filter the results according to your requirements.