What To Look Out For When Choosing A Personal Loan


What To Look Out For When Choosing A Personal Loan

What to​ Look Out For When Choosing a​ Personal Loan
With literally hundreds of​ personal loans on​ offer,​ it​ can be tempting to​ take the​ one that offers the​ lowest rate of​ interest.
However,​ while we all want to​ pay the​ least possible in​ interest on​ a​ personal loan,​ there are considerations that you​ need to​ make before signing on​ the​ dotted line .​
Otherwise,​ you​ could find yourself more out of​ pocket than you​ need to​ be.
Payment holidays
So,​ you’ve seen the​ advert that says Get a​ loan today and start paying it​ back in​ three month’s time! We think: Yippee!,​ I​ have access to​ a​ wad of​ cash and it​ won’t cost me anything until three months’ time!
Wrong .​
In most cases,​ you​ will be charged interest from day one of​ your loan .​
This means that for three months’ that wonga will be sat in​ your pocket or​ spent a​ new car / holiday / debt consolidation /new clothes and will be accruing interest!
Unless the​ terms and conditions of​ the​ loan say otherwise,​ this is​ how you​ will be charged .​
So,​ start paying back the​ loan as​ from the​ very first month if​ you​ don’t want to​ pay even more in​ interest.
Redemption penalties
Redemption penalties are normally hidden away in​ the​ small print and relate to​ charges levied if​ you​ decide to​ repay your loan early .​
Legally,​ lenders can charge you​ one months’ interest in​ lieu of​ repaying your personal loan early .​
And while most so,​ there are some nice,​ friendly personal loan provider who do not charge you,​ so keep an​ eye out for these.
Fixed rate
When choosing your personal loan,​ make sure that the​ rate you​ will pay is​ a​ fixed rate and not variable .​
With a​ fixed rate of​ interest,​ you​ will repay the​ loan back in​ equal instalments and at​ the​ same interest rate over the​ term of​ the​ lending.
With a​ variable rate of​ interest,​ this means that the​ interest rate can vary .​
And while it​ may go down,​ in​ reality,​ we all know that lenders are greedy and love any old excurse to​ make a​ bit more profit from their loyal customers and will therefore hike up the​ interest rates .​
This will leave you​ in​ a​ position of​ not knowing how much your loan repayments will be from month to​ month – which is​ no good is​ you​ are trying to​ budget – plus it​ means that you​ undoubtedly pay more in​ interest .​
Bear these three very important pointers in​ mind when shopping around for a​ personal loan,​ and you​ could snap yourself up a​ good deal on​ your personal loan.






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