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Plan ahead before choosing a personal loan company
With low interest rates over the last few years, borrowing with personal loans has been cheaper than ever.If you have a good credit history, rates for both secured and unsecured loans Read more...
What information does a credit report contain
Consumers are confused more than ever by exactly what information is shared with Credit Reference Agencies. Equifax, the instant online Credit information provider, recently highlighted what is Read more...
The easy way to compare credit cards
With more than 100 credit cards on offer in the UK with ever changing introductory offers, the odds of finding a good deal can appear stacked against you.In fact, it's far easier than you Read more...
The difference between choosing the best and the worst credit card or loan could you thousands!
How many TV commercials or newspaper adverts have you seen in just the last week offering you a cheap loan or credit card? Most of the time you probably ignore this marketing noise but, at some time, most of us will need to borrow money in some way. At that point confusion usually sets in and many consumers find it easier to visit their bank often believing that a history of prudent saving or borrowing will automatically qualify them for a good deal.
Can you spot the two mistakes in the last sentence? The first is to assume a bank can always provide you with a good deal in the first place and the second that a history of saving or borrowing with your bank will be of any direct advantage.
The Reality of Borrowing
While some banks do offer competitive credit deals from time to time, most banks make huge profits from customers who are confused by all of the financial jargon and fail to shop around. The reality is that the UK personal loan and credit card market is hugely competitive with deals changing weekly as lenders strive to take market share away from their competitors. By not shopping around you could be paying way over the odds for a loan or credit card you could be paying off for years.
Also bear in mind that the interest rate advertised is not always the one you will get which will depend upon your personal circumstances and lending risk. Every lender will check your financial circumstances to assess the chances of you paying the money back. This risk assessment is influenced by your income, outgoings and borrowing history recorded in your credit report. This is a crucial element in your ability to borrow money at low rates and should be checked by you before applying to any lenders.
Plan Ahead for a Cheap Loan, Credit Card or Mortgage
If you want to borrow any amout of money you need to be sure you can comfortably afford to pay it back first. Otherwise you risk jeopardising your financial security now and your ability to borrow at all in the future. Think carefully about the term of your borrowing and don't be tempted to simply extend the number of repayments to make them affordable. Remember, the longer it takes the more it costs.
The next step is to see what the lender will see when assessing you as a lending risk. Get a copy of your credit history report and look for any errors or red flags that could create problems for you or increase the interest rate you pay. If you find any errors get them removed by contacting the credit reference agency.
Then it's time to shop around, but make sure you are comparing like with like. The rate used to compare loans is APR (Annual Percentage Rate) but this doesn't always take into account all costs. So be sure to check for any additional penalties or charges before you choose the lowest rate and also calculate the TAR or Total Amount Repayable. You can find a comprehensive directory of personal loan companies at UK Loan Pages.
Top Tips
TIP #1:
When shopping for a loan compare lenders using the TAR (total amount repayable) rather than the APR (annual percentage rate). The TAR is a more accurate measure.
TIP #2:
If you have a credit card balance you can't afford to settle, consider a 0% balance transfer card to save interest for 6, 9 or 12 months. Use the money saved to pay extra off your balance every month.
TIP #3:
Make sure you shop around for credit and don't just go to the bank. High street banks are often one of the most expensive sources of borrowing.
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