Don T Let Your Personal Loan Become A Personal Moan

Don't Let Your Personal Loan Become A Personal Moan

Summary: Most of us have been in a position at some point when we simply have had insufficient funds to pay for something. This could be car insurance/repairs, course fees, holiday, Christmas presents, electrical items or even the weekly shopping. According to Credit Action, . million personal loan agreements were recorded in the first quarter of , totalling . billion. The national debt education charity reported that % of the personal loans were for cars, % for home imp...

Loans UK, personal loans, secured loans, unsecured loans, variable rate loans, fixed rate loans

Article Body: Most of us have been in a position at some point when we simply have had insufficient funds to pay for something. This could be car insurance/repairs, course fees, holiday, Christmas presents, electrical items or even the weekly shopping. According to Credit Action, . million personal loan agreements were recorded in the first quarter of , totalling . billion. The national debt education charity reported that % of the personal loans were for cars, % for home improvements and % for debt consolidation. The total outstanding balance for personal loans reached billion by March .

Personal loans can help you out of a difficult period when cash-flow is restricted, but dont go for the first one you find or you may find that your loan becomes a lifetime commitment and lifetime strain. There are numerous personal finance comparison websites available for personal loans including moneynet, moneyfacts and lowermybills.

In their consumer loans guide, moneynet advise that as a general rule of thumb, the more you borrow the cheaper the rate of interest. For example, a loan of , may carry an interest rate as high as % - reportedly justified by the lenders because of the relatively high administration costs associated with arranging a loan. For larger personal loans, lenders might only charge interest rates of around %.

Personal loans fall into two categories: secured and unsecured. Unsecured personal loans are the most popular, as secured loans may jeopardise the borrowers property or other asset. Secured loans are arranged on the assumption that the borrower puts up a form of security to the lender, typically the borrowers property. This allows the lender to take ownership of the asset should loan repayments be jeopardised. Whilst the prospect of losing your home may seem like a major disadvantage, the benefits of a secured loan often allow you to borrow more money at a lower rate of interest.

Despite such benefits however, most people are reluctant to lose their home and therefore take out unsecured loans because of this.

When reviewing personal loans and researching the cheapest loan on offer, you should be aware that you need to investigate the terms and conditions, as well as the annual percentage rate (APR). Note that if your credit history is poor then the terms of the loan may reflect this. Do your homework on redemption penalties and any other charges which might be associated with your loan. Some lenders will also offer payment breaks (deferred payment) either at the beginning of the loan period, or perhaps during the term, but again read the terms and conditions and check that excessive interest will not accumulate over any break periods.

Personal loans in the UK are governed by the Consumer Credit Act , but remember that you are ultimately responsible for borrowing a given sum of money and that once you sign a credit agreement, you are bound by the terms and conditions.

If you are finding the repayments challenging, always tell the lender as soon as possible and remember that any loan repayment problems are likely to be captured in your credit record/history, which will later impact on any other borrowing.

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