When you're thinking about how to pay for home improvements, debt consolidation, a vacation home, a car, or anything else, the question of which way will be the cheapest always comes up. Should I use a credit card, a personal loan, HP, an overdraft, a store card, a catalogue, a secured loan, a credit union, or an interest-free loan? Different people and situations call for different ways to borrow money. No matter what kind of loan you decide to take out, make sure you can pay it back. Make a list of all of your monthly costs to see what you can afford. Make sure to include your mortgage payment, gas, electric, and water bills, all other bills, food, clothing, hair cuts, and costs for going out with friends. Be true to yourself. If you're not, you're only fooling yourself, and in the end, you'll be the one who suffers.
Make sure that the credit deal you choose gives you good value for your money. Also, when comparing secured and unsecured personal loans, compare the APR to get an accurate idea of how much the loan will cost you. While you should think about everything, like what's available and right for you, your situation (such as being employed, self-employed, or old), your credit score, and how flexible the loan is, one way to compare deals and find the cheapest loan is to figure out the interest and APR. What is APR then?
APR stands for Annual Percentage Rate of Charge. It lets you compare different loan and credit offers. This is because, unlike a flat rate interest rate, this type of interest rate takes into account all costs, fees, and interest rates for that particular product. Before you sign a contract, all lenders must tell you what their APR is. It will be different for each lender. Most of the time, the better deal for you is the one with the lowest APR, so if you want to borrow money, look around. Don't forget that bank loans are sometimes cheaper than store credit plans. Ask the following questions if you find a deal with a low APR:
Do the charges that make up the APR change, or is the rate always the same? If the fees change, so do your payments. If the rate is fixed, the amount you pay back won't change. How good are you at setting up a budget?
Is there anything that isn't covered by the APR? This could include something like payment protection insurance that you can choose to buy. If so, make sure you know what they are and when you have to pay them. Are these costs added to the loan amount or paid up front?
What are the loan or credit's terms, and do they work for you? For instance, do you get to choose how and where you pay back the loan? If you get some extra money, can you pay off the loan early without being charged extra? Some people will say there are no fees, but there may be administrative costs if you end the contract early. Check to see if there are any fees for making extra payments on your loan.
