We were lucky enough not to have a loan, but from thousands of stories – it’s not great. However, what’s great is that the rates have gone down recently, and if you have a good rating for your credit, then you shouldn’t really worry.
However, because you’re probably already worrying too much, we’ve made a list of some things you need to take into account before you start filling out an application. Take a look at LoanReviewHQ.com to find the best lender. If you have an unsecured loan, you can only borrow £25,000
First of all, there are two types of loans: secured and unsecured. The unsecured ones are those that are meant for people that want to borrow a small amount of money – so the borrowing can happen if you want to get money from £1,000 to £25,000.
The Secured One Will Be Held Against Your Property
These are also known as homeowner loans’. The fact that they’re holding against your property means that your home will be at risk and there’s a possibility it will be reclaimed if you don’t pay your debt in time – which, in most cases, is monthly.
You can borrow as low as £10,000 and as much as £100,000. But, it actually really depends on how much fairness you have in your house, as the maximum loan size can get lower than £100,000.
The Rate That’s Advertised Isn’t Necessarily The One You’re Getting
You should know that those rates that you see for so many loan deals are the typical ones. It’s a marketing move – a strategy called ‘risk-based pricing’. About 66% of the people get the typical rate, but the others might have to deal with a higher one.
Best Credit Score – Best Rate
Recently, all the rates for unsecured loans got more reasonable, but it’s good to keep in mind that only those with the best credit ratings are going to get the best rates.
If The Term Is Longer, You’ll Pay More
As a rule, how much you’re going to pay every month depends on the amount you’re borrowing. But few people know that it also depends on the period in which you’re supposed to pay your debt.
If you want to get a longer term, the amount of money you’ll have to pay each month will be reduced. But it will be a bit expensive since you’ll be paying more in interest.
Let’s Take A Clear Example
You borrowed £5,000 for a period of five years and the loan comes with 7.9% for monthly repaying, so that’s £101.14. You’ll pay £6,068.57 in total, which represents more than £1,068 in interest.
If you choose a period of three years, the amount of money you’ll have to pay each month will get up to £156.45 and, in total, you’ll pay £5,632.25. Which means that you’ll save more than £400 for a lifetime of loans.
Get A Credit Card If You Want To Borrow Money For A Short Period Of Time
If you need money for a short period of time (let’s say one year or even less), then it’s a good idea to go for a purchase card. If you buy something with a 0% card, you will have to pay back all the money that you owe, without actually paying any interest.
However, this doesn’t mean that you can spend and spend until you’re left with nothing – at the end of the 0% period of time, you will be asked to pay interest as much as the higher typical rate.
If You Want To Pay Back The Loan Early, You Might Have To Pay More Than That
There are many loan lenders that, for a secure loan, can charge for early redemption penalties. This means that they will reprimand those people who can repay their debts early since the lender will be missing out a big amount of interest.
It’s good to keep in mind that for the amounts which are less than £25,000, the prices are restricted to two months of interest. If there are larger amounts of penalties, then the sum will get higher.
Be Aware Of The Hidden Fees
This is one of those cases in which you really need to read the terms and conditions of your lender before actually applying for a loan. If you read it carefully, you might discover that there may be some hidden fees.
Let’s take a clear example: they will charge you for administration or arrangement things in order to set up a borrowing. They can also charge you if you are late with your payment.
If you are interested in even more business-related articles and information from us here at Bit Rebels then we have a lot to choose from.