Six things you should know about personal loans

1- It’s Not Just About Credit History

Having a poor credit history may make you worry that you won’t be able to borrow the amount you need. Yet, whilst credit history is certainly taken into account, affordability is a bigger factor, which means that your income will help the lender judge your loan suitability.

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2- Sometimes A Credit Card Is Smarter

If paid off promptly every month, a credit card can actually work out cheaper than taking out a personal loan agreement. If you need less than £5000, and feel sure that you can pay it back in less than two years, then taking advantage of introductory 0% interest deals can be a smarter move.

3- Check Your Loan Provider

There are plenty of companies offering lending solutions, but be sure that your loan agreement is with a reputable firm. Always check your loan provider is a member of the FCA, which means it adheres to its rules – find out more here.

4- Watch Your Interest

Be wary about representative APR as the actual rate of interest that you’ll be offered may be much higher. Get advice from a specialist such as before agreeing.

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5- Don’t Get Greedy

It can be tempting to borrow as much as the lender is happy to give you, but financially, you’ll be better off taking the minimum you can manage with. This helps to ensure that you can comfortably make the repayments and avoid any financial problems spiralling.

6- Paying Early Is Possible

You can pay your loan off early or make repayments that are greater than agreed in the loan agreement. This will help you get out of debt more quickly. However, you may incur a fee, so check the terms and conditions.

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