Borrowing money can be one of the most difficult decisions to make. Once you have decided on the reason and the amount you then have to trawl through the huge tranche of available offers to find the one that is best fit for your circumstances.
Factors to consider
There are many factors to consider when weighing up the options, but the most important two are the length of time and the amount of money. These factors will both have an impact on the Annual Percentage Rate (APR) which is the rate of interest that you will be repaying on the money you borrow. Typically this can be around 6%-8%, but might be as high as 18% for a really short term loan. There are some short term cash loans which charge extortionately high rates of as much as 1780% APR, and these should really be avoided at all costs. Loan repayments are usually made on a monthly basis and it is a useful step to add the figure to your monthly budget and see that it is an amount you can afford before you commit yourself.
What to expect to pay
Loan terms are generally worked out between 1 and 5 years and the amount you will need to repay increases with the length of time and amount borrowed. As an example if you wanted to take out a loan of £10,000 and repay over a 4 year period the best deals available will charge just 6.0% APR That would mean you would pay £234 per month (approx) and the total amount to be repaid would be £11,238. There are usually some opportunities built in to repay earlier if you choose. Typically this is done in quarters so that after 1 year on a four year loan you can repay the remainder without any penalties. For most loans there is a penalty for early repayment.
In order to take advantage of the best loan rates available there are a few tips and some things to avoid. It is imperative that you can afford repayment, so don’t even consider borrowing money if there is a chance that you will not be able to pay it back. A good credit rating makes a massive difference in the availability of offers and in the amount you are charged. You might see a loan deal advertised, but if you have any black marks on your credit history, this deal may not be available for you. As always it is best to shop around and take your time, try to anticipate any changes in your circumstances before you dive in.