Posts Tagged ‘Loan Term’

Shop around for the best personal loan

Posted by Admin - Monday, October 25th, 2010

Personal loans are one of many financial products where savings can be made by searching for the best deal.

Best personal loan – rate
Loan rates can vary from 5.5% to over 20%. On a loan of 10,000 over five years this makes a difference of over 50 on monthly repayments over 3000 over the term.

This shows that you should not take out the first personal loan you see. However, not everyone will receive the attractive headline rate, so you should check the actual rate you are offered and whether this is still a good deal. The rate you are given can depend on your credit rating. This is a scoring system that lenders use to show how creditworthy people are.

Best personal loan switching penalties
If you are switching from one loan to another, you should check whether you would have to pay an early settlement penalty, as this can wipeout any potential saving. This applies to fixed-sum loans taken on or after 31 May 2005 and that are regulated by the Consumer Credit Act 1974. If the loan is paid off early, the lender may charge an interest penalty (subject to a set formula) of 30 days or one calendar month. This applies when the original loan term is more than one year and the advance is 25,000 or less. For terms of one year or less, no redemption penalty is payable. This penalty is set out in the rules governing repaying loans early and is covered by the Consumer Credit (Early Settlement) Regulations 2004. Loans taken out before this date may have higher penalties.

Best personal loan Payment protection insurance
You should also carefully consider whether to take out payment protection insurance with your loan. This covers monthly loan repayments if you are unable to work due to accident, sickness or unemployment. This can significantly increase the monthly repayments on your loan. Insurance is always provided by the lender, but can also be obtained from a stand-alone broker. With a stand-alone provider you can be assured that the insurance has not been added to your loan and interest charged on the resulting balance, as happens with some lenders insurance. Prices on this insurance also vary greatly, so it is certainly worth doing some research first.

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Shop around for the best personal loan

Posted by Admin - Monday, October 18th, 2010

Personal loans are one of many financial products where savings can be made by searching for the best deal.

Best personal loan – rate
Loan rates can vary from 5.5% to over 20%. On a loan of 10,000 over five years this makes a difference of over 50 on monthly repayments over 3000 over the term.

This shows that you should not take out the first personal loan you see. However, not everyone will receive the attractive headline rate, so you should check the actual rate you are offered and whether this is still a good deal. The rate you are given can depend on your credit rating. This is a scoring system that lenders use to show how creditworthy people are.

Best personal loan switching penalties
If you are switching from one loan to another, you should check whether you would have to pay an early settlement penalty, as this can wipeout any potential saving. This applies to fixed-sum loans taken on or after 31 May 2005 and that are regulated by the Consumer Credit Act 1974. If the loan is paid off early, the lender may charge an interest penalty (subject to a set formula) of 30 days or one calendar month. This applies when the original loan term is more than one year and the advance is 25,000 or less. For terms of one year or less, no redemption penalty is payable. This penalty is set out in the rules governing repaying loans early and is covered by the Consumer Credit (Early Settlement) Regulations 2004. Loans taken out before this date may have higher penalties.

Best personal loan Payment protection insurance
You should also carefully consider whether to take out payment protection insurance with your loan. This covers monthly loan repayments if you are unable to work due to accident, sickness or unemployment. This can significantly increase the monthly repayments on your loan. Insurance is always provided by the lender, but can also be obtained from a stand-alone broker. With a stand-alone provider you can be assured that the insurance has not been added to your loan and interest charged on the resulting balance, as happens with some lenders insurance. Prices on this insurance also vary greatly, so it is certainly worth doing some research first.

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How Much Does Your Personal Loan Cost?

Posted by Admin - Monday, August 2nd, 2010

A personal loan is a big commitment for your financial future, one that you’ll be living with for years. If you choose the wrong loan package, then the effects will be felt for the full length of the loan term, so it’s obvious that you need to take care when deciding which loan to apply for, and from which lender.

It’s also obvious that getting the cheapest loan possible should be a priority, but how can you properly compare the costs of loans? The first factor that most people look at when determining how expensive a loan or other form of credit is is the APR, or Annual Percentage Rate. This is the interest rate that will be charged on a loan, and the higher the figure, the more expensive the loan.

Although the APR figure is intended to give an accurate picture of the overall costs involved, there are several different ways of calculating it, and so when you compare the APRs of two loans side by side, you might not actually be comparing like with like. Because of this, you should also take a look at the other factors involved in how cheap or expensive your loan will be.

One major thing to look out for is whether the lender or broker will charge an arrangement or setup fee. This is a one off charge which is made when your loan application is approved and completed, and the fee is usually added on to the loan balance and repaid over the term of the loan. This means that not only do you have to pay the fee itself, but also interest, which will make it even more expensive than it initially looks. Arrangement fees are common on secured loans and mortgages, far less so on unsecured personal loans.

The length of a loan term will also have a major bearing on the cost of any loan. While a lower interest rate might be attractive, a low APR over a long term may actually lead to more interest being paid overall than a higher interest rate over a shorter term. It’s usually a trade off between a lower monthly repayment and a lower overall amount of interest paid – the choice is yours.

Many loans and mortgages feature something called an early repayment penalty or fee which is charged if you clear your loan before the originally agreed term. It is usually expressed as a percentage of the outstanding balance, and is most commonly found in loan products that feature an initially discounted rate, or a long term fixed rate, and is put there by the lender to discourage borrowers from taking advantage of an introductory deal and then immediately switching to a new loan, so costing the lender money in terms of lost interest charges. The period in which an early repayment fee may be charged is usually limited to the first few years of your loan, and will be made clear on the loan agreement before you sign.

Even if there is no early repayment charge, many loan companies will charge an ‘exit fee’ of a few hundred pounds if you repay your loan early, perhaps as part of a debt consolidation program. This fee is intended to reflect the administration costs involved in closing your account, but recently there are suspicions that it has come to be seen as another way for lenders to squeeze a little extra profit from the loan.

Finally, one thing to beware of when taking advantage of the payment holiday option available on some loans is that although you don’t have to make a repayment that month, interest will still be charged on the balance – so in effect you’re paying double interest for that one repayment. If you use this option a lot then, over the term of the loan, the effects could add up to produce a substantially higher APR than that quoted when you took out the loan.

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Eliminate Your Anxieties Through Unsecured Personal Loans

Posted by Admin - Monday, June 14th, 2010

Money is the prerequisite behind all personal desires. Whether you want to purchase a car, make home improvements or invest into the business. You need to have sufficient amount of capital. If you are incapacitated by some financial crisis and are not able to fulfill your personal desires, opting for unsecured personal loans can prove to be fruitful.

Unsecured personal loans do not bound the borrower to place a security against the loan. To cover the risk factor, lenders usually charge a high rate of interest.

Due to the absence of collateral, the credit score and the repayment capacity of the borrower holds an important place in determining the loan amount and rate of interest payable on the loan. Therefore, it is important for the borrower to get knowledge of his credit score. This will be useful for him to get the loan at correct rates.

Since unsecured personal loans are usually availed by tenants, therefore the loan term and loan amount both are kept lower. The borrower has the liberty to draw money ranging from 1,000 to 25,000. The amount may vary from lender to lender.

If you are denied of loans because of your bad credit history, unsecured personal loans provide you enough money to face the unexpected financial emergency. If you use the loan wisely, you can not only pay off your outstanding debts but also improve your credit score. Do not forget to make the repayments on time. If you fail to do so it will have a negative impact on your credit report and you can also face problems in getting loans in the future.

Different loan providers such as local banks and other financers are available in the market to offer you unsecured personal loans. But they have certain shortcomings. Dealing with physical lenders involves lot of time and efforts. You are sure to face many obstacles in your way. A substitute to these is online lenders. Online lenders have a fringe over the conventional lenders. They have reduced documentation work as the borrower needs to fill in a simple hassle free online loan application form. Collecting loan quotes form various lenders and then comparing them will help you decide the finest loan deal.

Unsecured personal loans provide an array of benefits-:

Multi purpose loans
Absence of collateral
No valuation of property required
Speedy loan approval
Available to tenants and homeowners
Reduced paper work
Accessible to bad credit people
Helps improve credit score

Avail finance without keeping your property at stake. Unsecured personal loans are right at your disposal to help you realize your dreams.

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