If you are looking to borrow a large amount of money- whether it is to fund a new business venture or a new car- sometimes the limit on your credit card is not big enough and this is where a personal loan may come in.
A personal loan could be a better option and there are a few reasons why:
Firstly, you get very competitive interest rates when you take out a personal loan and this can prove to be a lot cheaper than you think.
Different financial providers offer a range of different annual percentage rates, often varying from 3% onwards. If your borrowing needs are not that large, say for example you want to borrow £5000 the rates are still very competitive but tend to be larger and you could possibly be better off borrowing more for a lower interest rate.
Personal loans allow you to make fixed monthly payments which means that you know exactly what your monthly outgoings will be. Obviously, this will help if you are trying to work on a budget as you will know exactly what your repayments are in order to pay you loan off in a timely fashion.
Personal loans are also flexible and this allows you to choose how long you need in order to pay your loan off in an appropriate way. This is especially useful to people who are borrowing a fairly large sum and makes your repayments a lot more manageable.
Some providers offer the option of a payment holiday which allows you two months at the start of the agreement, but you should be aware that you will be charged interest between the start date of your loan to the first monthly repayment.
When you are comparing loans, there are a few things you should be looking out for before you decide to take the plunge and take out a personal loan.
If you decide that you would like to pay your loan off early then you should bear in mind that you will need to pay a fee if you do this. Another extra fee is an arrangement fee for taking out the loan- this is usually applicable to many personal loans. You also may receive a higher interest rate that the one advertised and this is because the APR is representative so therefore only has to be offered to 51% of applicants.
Credit score is another major thing to consider. If your score is poor, then lenders are more likely to turn you down. It is a good idea is to look into the loan and compare it before you go ahead and and take out the first loan you come across. Adding to this, when you take out a loan you should read all your paperwork including the fine print to ensure that you are not paying for any hidden fees- for example, PPI was a massive financial scandal that came to light in the late 90’s and evolved to be the biggest economic outrage to time. To claim back a refund go to http://www.ppirefund.co.uk.