How To Find The Best Loans?
Before you go hunting for the best loan, it helps if you have a clear idea of what you can afford to repay on a monthly basis and over what period you would like to repay it. This will give you some idea of the amount that you can afford to borrow and that, in turn, may help you work out what you can do with your loan!
Start by making a simple budget of your income and expenditure. Add in all the known costs such as mortgage or rent, gas, electric and council tax. Make sure you include a realistic estimate for food and travelling expenses and see what disposable income you have left. At this stage, you still need to consider other discretionary items such as gym memberships, mobile phones and entertaining – but these are optional if you want to maximise your loan for something special.
Once you know what free cash you have available on a monthly basis, you can make an estimate as to how much you can borrow. For example, if you have £200 'free' cash per month, then this level of repayment for five years means that you could borrow around £10,000. Enough to buy a new kitchen or car! Of course, you may not want or need to borrow that amount, but at least you know that you have a cushion available if you need it. There are a number of loan calculators available on the internet to help you work out what repayments will be for a given amount of loan or vice versa. One calculator that also returns a range of competitive loan terms is www.moneysupermarket.com.
Now you have a handle on what you can afford, you can concentrate on finding the best loan deal for you. If you are a homeowner and looking to borrow over £7,500 then you may consider some of the secured loan deals to be good value. Certainly in terms of headline rate, or APR, they may be – but the term of the loans can be long meaning that the total amount repaid over the life of the loan can be quite high. If you can, look for a shorter loan term to minimise interest charges – even if you pay a slightly higher interest rate on the loan.
Secured loans certainly offer some of the lowest interest rates available. But remember that if you fail to keep up the repayments then your home may be at risk of repossession. With an unsecured loan, that is one where you do not offer any security by way of charge or mortgage over your home, the only penalty for non payment is that you will be sued for the balance but will not lose your home.
The very best loan deals will be available to customers who have a good credit history. The most recent two years of your history will weight highest in most credit scoring methodologies so any missed payments, CCJs or IVAs that you may have had will slowly have less influence on your credit file. Getting, and keeping, an excellent credit score is a key to finding the best loans. Lenders look to minimise their risk by seeking out the best risk customers. Therefore, you should regularly check your credit file to make sure that any entries are correct and still valid. For example, it may be that a lender has forgotten to mark your last loan as fully paid after an IVA. Your credit file can be checked through either of the two biggest providers of information. Equifax or Experian. For a £2 fee, you can request a copy of the information held or utilise their free credit check offers. Information can be corrected directly if found faulty. Expired CC's may need a visit to the court to get them cleared.
The best loan is a combination of the right amount of money on the right terms for you. Unsecured loans are very flexible and, whilst may appear to carry higher rates, can lead to you repaying less as a total amount of charges due to their shorter period than a long term secured loan.
Where loans are concerned, try to borrow only what you can afford to repay and use the full resources of the internet to get a good selection and feel for the rates and terms of loans available. Free and impartial advice on debt management is available at the Consumer Advice Bureau.