How do I choose the Best Loan for me?
If you are looking to borrow money then you may find yourself getting rather confused with all of the different loans available and different lenders. It is important though that you pick the right one because you will then get the best value for money. But how do you pick?
If you are prepared to pay then you could ask an independent financial advisor to help you. They will be able to explain to you the difference between different loans and which will suit you and your purpose best. You can find out this information yourself though, but it will take a bit longer but you will save money by doing so. It is up to you whether you would be happy paying for the advice. You may find that if the loan is a large one that you will save so much money from using the advice you get that it is well worth it but a smaller loan may not offer so much in terms of money savings compared with other similar loans so you may not make enough to cover the fees.
Right loan for right purpose
It is important to pick the loan which will best serve what you want. This can be tricky but once you understand a bit more about loans this can help. Firstly, you need to identify if there is a specific purpose you are borrowing money as there are some loans set up for this. These are mortgages for buying a home, student and postgraduate loans to help cover the cost of course fees, car loans for buying a vehicle and things like this. The name of the loan gives away the purpose. However, there are also many loans which are for general use such as personal loans, payday loans, credit cards and overdrafts.
You need to also think about how much money you want to borrow. Some loans, such as personal loans will allow you to borrow thousands of pounds but an overdraft may only allow you a few hundred, depending on the limit that your bank have set. Therefore once you have identified how much you need to borrow; you will be able to decide which loan types would be most suitable.
Knowing how much you will have to repay and how often can be really important in helping you to decide. You need to make sure that the amount is affordable for you. You need to consider how much money you usually have available each month after your essential spending has gone out and whether this will be enough to be able to afford the repayments.
It is also important to calculate the cost of the loan and see how much that is. You could be shocked as to how expensive some loans can be in total as it is not something that we often calculate. work out whether you think it will give you good value for money.
Best value for money
This can seem a bit odd to work out for a financial product but it is just as important as for anything else that you buy. Assuming you have decided on which loan type you want to go with, as it suits your needs the best, you then need to compare the lenders to see which is the best value for money for you.
You will need to compare the cost of them, but this is not necessarily the only factor that will be important. You also need to think about what you are getting or your money. Ask yourself questions such as what sort of service are you getting, what is the reputation of the lender like, what will they be like if you miss a payment? This is a lot of information but you should be able to find it out by looking at online reviews as well as by looking at the terms and conditions of the loan or speaking to the customer service department.
It is important to get this decision right. It will help to determine whether you will be able to afford the loan and whether you feel happy with that specific lender. This could have a big impact not only on the cost but if you have any questions or get into trouble with repayments as you will want to go with a company that will be able to help you.
Finding out how much the loan will cost and whether you will be able to afford the repayments is important. Obviously, you do not want to take on something that you cannot afford or that turns out to be outrageously expense. However, you also need to wary of anything that is too cheap as it may not offer you everything that you need. This is why it is important to study this carefully before you sign up to a loan.