It can be hard to find the right personal loan for you, and if you don't know what you're getting into, you could end up in financial trouble. Here are some of the best tips for picking a personal loan:
Secure and not secure
A secured loan is one that is backed by something of value, like your home. Secured loans have lower interest rates than unsecured loans, but you could lose your home if you don't make the payments. If you only need a small amount of money and have good credit, go for an unsecured loan.
Borrow as little as possible for a short amount of time.
The longer you take to pay back the money you borrow, the more interest you will have to pay. Borrow as little as you can and pay it back as soon as you can to keep interest payments to a minimum.
Fixed vs. variable
Most personal loans have interest rates that do not change. This means that the monthly payments won't change over the course of the loan. However, some lenders offer variable or flexible loans. If the rate goes down, these loans are good, but you should also plan for the rate to go up.
APR
The amount of interest you pay on a loan every year is based on the APR, or Annual Percentage Rate. Even if a low APR seems appealing, be careful because this is not the only fee you have to pay when you pay back your loan.
The usual APR
If you want to compare APRs, you should understand what "typical" APR means. Even though you might be able to get this rate, it's important to remember that if you don't have good credit, you'll end up paying a higher APR than the typical advertised rate.
TAR
The TAR, or Total Amount Repayable, is a better way to figure out how much a loan will cost. This will tell you how much you have to pay back to the lender. The package is better as a whole if the TAR is low.
Browse around.
Before getting a loan, shopping around is the most important thing to do. Make sure you've thought about all of your options before you sign anything. You can find the best rates for your needs if you can separate all the different parts of a loan and focus on the parts you need.
Look online
Even though your bank might have a good deal, most of the best loan deals can be found online. This is because online companies have low overhead costs. There are many websites where you can compare the best prices for personal loans. This will help you find the best deal for your needs.
Watch out for PPI
When you get a loan, you might be offered PPI, which stands for Payment Protection Insurance. This insurance pays your bills if you get sick, hurt, or lose your job. Even though this insurance might help you, it is very expensive and only a small number of people can use it. Check to see if some of these things are covered by your current employer or find a cheaper policy that will cover you.
Early people moved in
Almost three quarters of loans are paid off early, so it's important to know what the fees are. Even though fees can still be high, more and more lenders are doing away with them completely. You could save a lot of money if you could find a lender who doesn't charge for paying off your loan early.
