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