In recent years, more and more people are becoming eligible to take out a loan from the bank. It can help people to meet goals such as buying a car, starting a business or go on that holiday you’ve always dreamed of. The key thing with loans is not to get one if you don’t need it. But if you really are set on getting that loan, here are some tips you can follow to get the best deal.
- Don’t borrow more than you can repay
It may seem blindingly obvious to some but living beyond your means is a quick way to get sucked into debt. It is recommended that you don’t borrow an amount that means you have to pay back 50% of your monthly income each month. In fact, around 10-15% of your monthly income is manageable for most people. By calculating how much you can afford to repay over the period you wish to take the loan out for, you can work out how much of a loan you need.
- Compare rates
Hunting around for the best rates is one of the best things you can do when looking for a loan. You don’t have to automatically go with the bank that holds your current account. It pays to shop around and compare APR’s offered from each company so that you can see the true cost of taking out a loan. Make sure you compare interest rates as well as other charges the company may charge too.
- Check the T’s and C’s
Whilst some offers can look good from the outset, it’s always best to check the terms and conditions of your loan policy. There are some companies that offer great deals, but you have to join them in other ways such as taking out a loyalty card or having a current account for at least 6 months. Many investments come with risks, some more than others, Binary Options Expert explains how this is applied to the likes of binary options, forex and such – it’s something that applies to the entire financial world.
- Early repayment
If you think you may be able to pay the loan back earlier, then check you will not be charged. It is always possible to pay off your debts early and should be done if you can. However, watch out for loan providers that charge if you want to do this. If you think you are able to pay back the loan early, check out the costs and search for a better deal if you can. Alternatively, adjust the repayment plan and save yourself the extra charges.
- Payment Protection Insurance
PPI has had a bad reputation in the past because it was missold to many customers. However, having proper insurance on a loan can help if you are unable to meet the repayments due to sickness or unemployment. Consider whether you think PPI is really needed for your particular circumstances, but also be aware of the costs financially if you are unable to pay back the loan. Much like the loan itself, hunt around for the best deals so you can get value out of your policy.
- Don’t over-apply
Before you start looking for loans, it’s best to check your credit rating. If you start to apply for loans left, right and centre, it can get flagged up and you can appear like you’re having financial difficulties. If you get caught with a bad credit rating, there are companies such as Loans2go can provide you with emergency cash and are authorised by the Financial Conduct Authority. However, you do need to be in a position to make the repayments or you could be in a worse situation further down the line.