Wednesday, August 06, 2008

Essential Personal Loans Advice

For people in need of extra credit, a personal loan is often one of the first choices to consider. Personal loans can provide finance for whatever you want, be it a car, home improvements etc. They also provide the ideal solution for paying off existing debts in one go, providing you find a loan with a good interest rate. Here are some things to consider when choosing Personal Loans.

How much to borrow?

Always try to borrow as little as you can and aim to pay it back in the shortest amount of time. Borrowing over long periods spreads the debt and decreases your monthly repayments, but it also dramatically increases the amount of interest you pay.

Check your finances to ensure that you can afford to pay back the monthly repayments comfortably.


Find the loan with the lowest APR (Annual Percentage Rate). Your rate will normally be fixed for the duration of the loan, which means that the amount you pay each month will remain the same. One disadvantage of this could be that you could be paying more than those who take out the same loan in six months time.

Credit History

Before a lender will consider you for a loan, they will need to give your credit history the once over. They need to make sure that you pose little financial risk to them. A poor credit history doesn't necessarily mean you won't be accepted, but you will probably have to pay a higher interest rate.


Loan insurance will cover your monthly repayments in the event of unemployment or ill health. Insurance is expensive so think carefully as to whether you really need it or not. Also, ask about exclusions and small print which could make it difficult to make a claim.