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Thinking of taking out a loan?
If you are short on cash, and let's face it most
of us are and have been for the past 12 months, then maybe you are considering
a personal loan. Before you embark on the getting-easy-cash route, there are a
few things you need to remember and some basic information you should know
about this type of loan.
Loans aren't as easy to get as they used to be in
the days before the recession, when credit was easy - all too easy - to come
by. Now the banks are being tougher, not just because they don't want a repeat
collapse that got us all here in the first place, but also because the
Government is imposing tougher regulation and tighter restrictions on lending.
You will need to be over a certain age, have a
good credit record - and this doesn't just mean you haven't been bankrupt
before - you must be able to prove your earning capacity as well as any other
direct debits you need to pay including mortgages, rent, utilities and other
loans. You need to work out what you can afford to borrow i.e. how much you can
afford to pay back.
You need to take into account your average monthly
spending as well as bills and leave some leeway for contingencies, because you
never know what's going to crop up. If you go into a bank knowing this, you are
more likely to be taken seriously and therefore given the loan you want.
There are different types of 'loan' available to
you. You may feel happier just getting a credit card. This is a highly flexible
route and allows for day to day borrowing and you can easily increase the
amount you pay off. If you just want a small amount of money, then this could
work out nicely if you can get a card with 0% interest for three months to up
to a year.
However, if you want more large scale lending then
you will need a traditional type of loan. You need to decide whether you want a
'secured' or 'unsecured' loan. A secured loan requires you to pledge collateral
against the value of the loan. This is usually a property or something of
significant value. This enables the lender to collect money against the loan if
you default on your payments. This is the most common route for large payments
such as a mortgage.
However, the more common type of loan for everyday
items is unsecured. Because the lender is assuming all the risk if you default,
these loans are much harder to come by and this is when you really need to have
all your finances in order, dot every 'i' and cross every 't'.
Loan rates are very low right now thanks to a
low-base rate of just 0.5%. One of the best rates available right now is from
Santander which is offering an APR of 8.9% on
personal loans
between £7,500 and £14,950. Take a look at their site for more
information.
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