Loans are everywhere, and they allow us to do things that we just can’t do on our own. The personal loan is special because it really doesn’t have any rules. With a business loan, you’re expected to take care of the business. However, a personal loan is all about you. You can borrow money from a personal loan agreement for just about anything that you can think of. You want to catch up the bills? No problem. You want to get yourself a new outfit? No problem. You want to pay off high interest credit cards and get a loan with a lower interest rate? You can do that too. It’s really up to you to figure out what path you really want to take.
But if you haven’t done a personal loan in a while, you might have missed a few considerations that you might want to go ahead and take. Here’s what you need to know:
You might want to check your local building society for the best rate on a personal loan. Building societies are beginning to capture the attention of the marketplace by making sure that they can offer attractive rates. They know that if they treat you right on a personal loan, you’ll consider other types of loans with no problem at all.
You also want to look at supermarket comparison sites for good loans. Trying to figure out the best rate can be a hassle on your own. Why do the hard work and heavy lifting if you don’t really have to?
You really need to make sure that you check the small print before you really get serious about a loan. You need to make sure that you’re an eligible party. The company might extend a loan to you, but it could have completely different terms than what you thought you were getting. Some people think that they’re okay to skip all of that legal information, but that’s simply not true. You owe it to yourself to start looking at things from a different perspective. Remember that you have all of the power in the world to avoid paying more interest than you should. Interest is simply how the lender makes their profit. They will want to make some profit, but if you’re a creditworthy applicant, they’ll try to cut you a deal in the hopes that you’ll continue to take out credit based products with them.
One thing that you will want to avoid is payment protection insurance, otherwise known as PPI. We think that PPI is really a waste, because there are so many exclusions to it. What’s that, you have a pre-existing condition? Surprise, PPI doesn’t cover you while you’re sick. You need to read the fine print to make absolutely sure that it’s going to benefit you.
Don’t forget that some loan companies sneak in early repayment penalties as a way to “protect” themselves from losing out on potential profits. If you find that this is going to affect you, then you want to make sure that you avoid that as much as possible — search for a loan that doesn’t punish you for finding extra money to pay it off early.
Studying your credit rating before you know what you’re going to apply for. Don’t think that the lenders will automatically let you know whether you’re in their top tier or not. You need to know your own finances well enough that you can negotiate this type of thing on your own.
Social lending could help you more than looking at the traditional banks. These days, more and more people are joining the social lending movement to have their loan needs taken care of. It’s a great win for personal loan “investors”, because they get the interest paid to them instead of the banks. For the small borrower, it’s a great way to be judged as a whole person rather than just a number. Remember though that you’re still going to have to demonstrate your ability to repay the loan.
Borrowing more, if you can, is better than borrowing less if you’re looking at pure interest rate alone. It’s going to be completely up to you to figure this type of thing out and plan accordingly.
Secured loans for personal use are getting popular, but remember that you’re putting your collateral at risk. So if you’re putting up your home, you have to make absolutely sure that you’ll be able to make those payments. Good luck!