If you have good credit and are looking to borrow money then a personal loan might be just what you’re looking for. However, if you have bad credit or no credit at all then this can be tricky. You can still borrow money but it will come at a cost. To borrow money, the bank requires that you have a good credit rating. They will also check to see how long you have been a member of your household and your ability to make repayments. When you apply for a personal loan you will be asked a few personal questions that relate to your personal circumstances and your credit rating.
How much you’re able to borrow:
The easiest way to discover the best personal loan deals is to conduct a personal loan comparison based on your borrowing needs and the amount you’re able to borrow. This will allow you to easily calculate how much you will end up paying monthly. This includes any fees associated with the loan, any interest rate charged, the terms and conditions of the loan and your budget. Interest rate: This is basically the cost of borrowing cash. The interest rate you’re offered will depend upon your personal circumstances including, how much you earn, how much debt you have, your ability to make repayments and your personal budget.
Annual percentage rate:
This is also known as APR and is the standard interest rate applied to these types of loans. APR is often quoted as a range instead of a figure because it’s a more accurate reflection of the cost of the borrowing. It can be confusing however, and many people get confused between a fixed and variable interest rate. Your lender should be able to explain this in full to you but here are some quick tips to help you find the cheapest APR for your personal loans. Annual Percentage Rate – A comparison rate between two different APR’s will show you which option gives you the lowest cost.
Fixed interest rate:
Comparing an unsecured personal loan to a fixed interest rate is similar to comparing your mortgage to an ARM. However, a fixed interest rate is usually applied to a portion of your borrowing, whereas an ARM would give you the entire amount at one go. As such, the tracker interest rate applies to a set schedule of monthly repayments for a given period. A comparison rate will show you if you will pay more interest over this period.
Low rate:
A low rate means that you’ll pay less interest over the whole period. Of course, there’s a risk involved because your money could be held by the lender and not be paid out if you default. You need to make sure that you get the cheapest available unsecured personal loan with the lowest monthly repayment. To do this, you’ll need to look at how many months you plan to keep the loan. If you’re planning to extend the repayment period, then you should go for the long-term interest rate. If you can only afford the short term, then consider a low rate as it’ll be cheaper in the long run.
Excellent credit rating:
One of the advantages of applying for an unsecured personal loan is the low rates; however, if you have poor credit, then the rates can be even better. It’s important to remember that a poor credit rating means that you have more risks involved in borrowing. That’s because lenders will have higher interest rates; they view those with poor credit ratings as high risk borrowers. If you want excellent credit, make sure you make all your payments on time and avoid late repayment fees.
Extensive borrowing options:
A good reason to apply for personal loans is because you can borrow a large amount of money over a long period. Therefore, if you plan to use the funds for debt consolidation purposes, then you should consider those with longer repayment periods, such as five years or more. You can also opt for shorter term personal loans if you only need to borrow a few thousand dollars for a short period of time. In this case, you’ll get excellent credit and the low rates will be appropriate for your needs.
Monthly repayment option:
The monthly repayment option is very important because it affects your overall cost of borrowing. Lenders charge higher interest rates when borrowers choose to make monthly repayments over a longer period. This is why it’s important to compare unsecured personal loan options before choosing the right one for you. Compare the terms and conditions, interest rate and other costs of each offer so you end up with the best monthly repayment option. A comparison rate is usually found on the APR side of the table so you know exactly how much you will be paying in total.