Help on choosing UK Loans
What to look for
When choosing your loan, firstly you need to decide whether you want to take out a secured personal loan/home owner loan or an unsecured loan.
secured personal loan/home owner loan
Then
you want to decide on your attitude to the following:
Flexibility
Early Repayment
Shorter
Repayment Periods
The Small Print
The Lowest APR
Compare
three quotes
Use a Broker
Beware
Arrangement Fees
Beware the Headline
Interest Rate
Flexibility
Look for flexibility in the terms - particularly relating to the repayment.
Some lenders will allow you to overpay or underpay - depending on your finances at the time.
Otherwise
you could find there are expensive penalties if you don't stick to the
terms of an inflexible loan agreement.
Return
to Top
Look
for an Early Repayment.
Try to choose a loan that allows Early Repayment.
This will mean you could save a lot of money by paying back the loan sooner and saving on interest charges.
However
many lenders will charge extra for this.
Return
to Top
Look for Shorter Repayment Periods
Try to choose a loan with a shorter repayment period.
Although you'll have to repay a higher amount every month, don't be fooled. It'll cost you a lot less in the long run.
To see this, ask the lender to demonstrate
the total amount you'll have to repay for various periods.
Return
to Top
Read the Small Print
By the small print we mean the bit where all the terms and conditions of the loan will be confirmed. (It's in the Credit Agreement).
Yes, it's usually in very small print.
Read this through carefully and
make sure you understand the terms and conditions you're signing up to
before choosing your loan.
Return
to Top
Get the Lowest APR
Try to get a loan with the lowest APR.
This means that it really is the cheapest.
The
lenders can easily mislead you with their monthly percentage quote. However with
the APR they are legally obliged to calculate the true cost of the loan.
Return
to Top
Shop Around
Always shop around for your loan.
Try
to compare three quotes.
Return
to Top
Consider using a genuine finance broker.
These are firms who can search the market to get you the best deal.
Watch out though because many so called brokers will only deal with a few lenders - usually the ones who give them the best commission.
To get around
this go to more than one broker and compare their quotes.
Return
to Top
Watch out for Arrangement Fees.
Some lenders will charge you these.
Usually they're just another way to make money from you.
Unless the loan will be cheaper overall
than one which doesn't charge fees, avoid them.
Return
to Top
Watch out for the Headline Interest Rate.
(What is the Headline Interest Rate?)This is the interest rate you'll see displayed prominently in the adverts. It applies to both secured personal loan/home owner loans and unsecured loans.
Typically it'll shout "0%" - or something similarly low.
Ignore it.
This is one of the tricks of the trade used by lenders.
After Enron's finance department have done their calculations you can guarantee that it will cost you a lot more.
Always
compare loans using the APR.
The lenders can't cheat on these.
Return
to Top
