When you agree to take out a loan, you are agreeing to borrow an amount from a bank or creditor and repay at agreed amounts over a set period of time. There is almost always interest applied to the loan, which will depend on a number of different factors: the amount borrowed, how long you’re taking to repay it, and (often) your credit rating. Most personal loans are unsecured (so you won’t lose your home).
A personal loan covers you for most of the reasons you may want to take out a loan:
A debt consolidation loan is where you get a single large loan to cover payments of other, smaller, debts. However, we have found that those who struggle to repay their original loans, often struggle to repay this larger loan.
A personal loan is a great idea to improve your home, and can increase the cost of home should you ever decide to sell it. However, loans can be the last thing on your mind, if you begin struggling to pay for it.
A personal loan is a viable alternative to car finance and if you cannot save up for a car – and need one – you should definitely look at both options. Unfortunately, running a car can be expensive, leaving many people short of money and struggling to repay their loan.
A personal loan can give you the money to pay for a wedding or a go on a holiday of a lifetime, but once the event is over other priorities raise their head and you can find yourself falling behind in your loan repayments.
Do You Need A Loan?
If you are interested in taking out a loan, you first need to ask yourself if you NEED to take out the loan. It is much better if you can save up and buy whatever you want upfront, rather than putting yourself in debt simply for the sake of having it sooner. Obviously there are times where this isn’t possible, and then you need to make sure that you know what you are getting into and make sure that you are getting the best deal for you!
When you are applying for a loan, the interest rate advertised in not always the rate you will receive. The rate can vary depending upon several factors (as mentioned above), so make sure you know exactly what you’re going to be repaying before signing anything. Stay alert for varying rates. This means that your interest rates can go up as well as down, and could make repayments unpayable.
Term of Loan
The longer you take out the loan, the more you will be repaying. However, you will be paying less per month, so it’s a delicate balance. You also need to think whether you will begrudge paying for that washing machine ten years later.
If you decide that you definitely need the loan, make sure you look around and compare suppliers. Don’t simply go to whoever you have your bank account with. Credit unions often have better interest rates than banks, and are often willing to lend to those on lower incomes or bad credit records.
Struggling To Repay Your Loan?
If you are struggling to repay your personal loan, your first course of action should to contact your creditor. They may be able to help. After two or three missed payments, your creditor will begin chasing for payment through letters and phone calls, further interest and charges could be applied, they could even apply for the courts to become involved.
If you find yourself in this situation then you should contact our friendly advisers today! All of our advice is completely without charge and there is no obligation to use any of the solutions we may suggest to you, and if we can’t help you, we will point you in the direction of someone who can. So, what have you got to lose? Complete the form now and we’ll get back to you as soon as possible.
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