| Choosing the right personal loan for your needs | | | | A better way to look at how much a loan will |
| can be tricky, and if don't know what you are | | | | cost is the TAR or Total Amount Repayable. This |
| getting yourself into then you could end up in | | | | will show you exactly how much you will repay to |
| financial difficulties. Here are some top tips to use | | | | the lender. The lower the TAR then the better |
| when choosing a personal loan: | | | | the overall package is. |
| Secured vs. unsecured | | | | Shop around |
| A secured loan is a loan that is secured against | | | | The most important thing to do before getting a |
| collateral, such as your home. Secured loans have | | | | loan is to shop around. Before you sign anything, |
| better rates than unsecured loans, but they are | | | | make sure that you have looked at all possibilities |
| more risky because you could lose your home if | | | | for your needs. If you can separate all the |
| the repayments are not met. If you are | | | | various features of a loan and concentrate on the |
| borrowing a small amount of money and have | | | | features you require, you can find the best rates |
| good credit, then go for unsecured loans. | | | | for your needs. |
| Borrow as little as you can over a short period | | | | Look online |
| The more money you borrow over a longer | | | | Although your bank may have a good deal, most |
| period of time, the more interest you are going | | | | of the best loan deals are to be found online |
| to pay. Borrow as little as you can afford to, and | | | | because of the low overhead costs associated |
| pay it back as quickly as you can so that you | | | | with online companies. You can find many web |
| minimise the interest payments. | | | | sites that will allow you to compare the best |
| Fixed vs. variable | | | | personal loan prices, helping you to get the best |
| Most personal loans have fixed interest rates. This | | | | deal for your needs. |
| means that the monthly repayments will remain | | | | Beware of PPI |
| the same throughout the loan period. However, | | | | When securing a loan, it is likely that you will be |
| some lenders offer variable or flexible loans. | | | | offered PPI or Payment Protection Insurance. This |
| These loans are good if the rate goes down, but | | | | insurance covers your payments in case of illness, |
| remember budget for the rate going up as well. | | | | accident or unemployment. Although this insurance |
| APR | | | | may help you, very few people are eligible to |
| APR or Annual Percentage Rates determine the | | | | claim under its terms, and it is very expensive. |
| amount of interest you pay yearly on the loan. | | | | Look to see if your current employer covers |
| Although a low APR might seem appealing, be | | | | some of these items, or find a cheaper |
| careful because this is not the only charge that | | | | stand-alone policy that will cover you. |
| you are liable for when paying back your loan. | | | | Early settlement |
| Typical APR | | | | Nearly three quarters of all loans are paid off |
| If you are comparing APR, then it is good to | | | | early, so it pays to know the charges for doing |
| understand the concept of 'typical' APR. Although | | | | so. Although charges can still be high, more and |
| you may qualify for this rate, it pays to | | | | more lenders are scrapping the charges |
| remember that unless your credit history is good, | | | | altogether. Finding a lender that does not charge |
| you will end up paying a higher APR than the | | | | for early repayment might save you a lot of |
| typical advertised rate. | | | | money. |
| TAR | | | | |