Finance >> Personal Loans

Personal Loans

A Personal loan is usually taken out for a variety of reasons. You might want to buy a car or repay bills of your credit cards. These loans are available at a low interest cost and repayments can be done over easy monthly installments over long periods of time. Some factors which require your close consideration while choosing a Personal Loan deal are:

Limits on Borrowings

Some companies have limits on the loan amount and don’t issue loans more than £16,000. While others offer upto £24,000. Borrowings are now made easy and money is deposited in your bank account just in a few days. Applications are accepted online or over the phone.

Payment Protection Insurance

Loan Incentives

Many companies offer a lot of perks with their Personal Loans. These perks are very evident and are well promoted. They might offer you immediate transfer of sanctioned loan amount to your bank account. Some companies also offer payment holidays at the commencement of the loan term.

What are not well promoted are the penalties, charges and fees associated with the loan. Arrangement fees charged for administrative costs associated with the loan are common.

Some companies also charge early repayment penalties. In the future you might have excess savings and you could be in a position to repay your loans earlier then the scheduled repayment period. You could save on a lot of interest that way. But if you are charged penalties for early repayment it might become an expensive option. So it is very important to keep all these factors in mind before zeroing on a Personal Loan deal.

Interest Cost

How much are you paying per annum for that borrowing? It is very important to find out the Annual Percentage Rate or APR from your lender or dealer.

The interest rates are inversely proportionate to the amount of the loan. Larger the loan amount lower the interest costs.

Interest rates are usually fixed for the Personal Loan term and thus there are no surprises are far as your monthly outgoings are concerned. However when you are going in for a fixed rate Loan you are disallowing yourself of the benefits of falling interest rates in the future. None the less if the rates are expected to rise in the future, you have hedged your interest rate against further rates increase.