Not too long ago, if you wanted to borrow money, you didn't have many options and couldn't easily compare loans. Either the bank on the main street, a building society, or a friendly society. And the amount you could borrow was also very limited. You mostly counted on the bank manager's kindness and hoped that your credit record was good enough. If not, too bad, you can't get a loan.
Today, you have too many options. Banks and building societies are always in competition with each other. People in Britain owe more than one trillion pounds, so the situation is almost out of control. That is a lot of money. And that's why it's important to compare loans carefully before taking out a loan for a large amount of money.
Loans are not all made equal. You must carefully read the fine print or ask an expert to explain everything to you. For example, if you were able to pay off a loan that was supposed to last five years in, say, a year, would you be able to do so without being charged a fee? You should always try to give any loan you get as much flexibility as you can.
There are two main types of loans: secured and unsecured. A secured loan is one that is backed by something you own that has value, like your house. If you don't pay back the loan, you lose your house or whatever you put up as collateral. A personal loan or an unsecured loan is one that is not backed by anything. Most of the time, these kinds of loans are for smaller amounts, and your credit history is a big part of whether or not you get the loan.
When comparing loans, there are many things that secured and unsecured loans have in common that you should think about. The interest rate on the loan is one of the most important things to think about. The lower the interest rate, the better, since you'll have to pay back less in total. In general, you will have a better chance of getting a low interest rate if the loan is well-secured and your credit history is good.
A lot of people have payment protection insurance. Like the name says, it protects your ability to pay. If you can't make a payment for whatever reason, you can use the payment protection insurance without getting into trouble. Of course, you should always pay close attention to your personal situation, both as it is now and as you think it will be in the future. No one can stop the unexpected from happening, but you can get ready for what is likely to happen.
When you compare loans, there are many things to think about. You shouldn't just take a loan from your bank because they know you well and it will be easier for everyone. If you pay close attention to what's on offer, you can usually get a much better deal that fits you better. The organisations that lend money are not doing anyone a favour; it is a business transaction in which you help them and they help you. Keep this in mind every time you compare loans, and you'll always make the right choice.
