Taking out a loan is never something that should be done on the fly I always think and if you are self-employed it can be even trickier. It requires a lot of thinking and weighing up of options so I thought it would be a good idea for me to take you through what I think are my 5 top tips when it comes to taking out a loan.
Research is KEY.
There are a great number of comparison websites available that you can use from comparethemarket to moneysupermarket. There are also a good number of loan providers that aren’t on their systems so it’s worth going to look at both banks and also websites like PayPal Credit which offer loans should you need them. Your research needs to go way beyond just ‘chatting your friends’ about what they did as every situation is different. One place that is very much worth checking out is a credit union. Here in Leeds we have one which offers loans and savings at excellent interest rates and can even be set up to directly take money from your pay before it hits your bank account for added convenience. There are certainly lots of options available from your local high-street option to doing online installment loans with check into cash.
Always check the Interest rate.
A lot of banks will lure you in offering you £££ for however many months at a very low rate but it’s not until you have entered all your details that you find the rate has changed and become more, shall we say ‘personalised’ to yourself. This happens more often than not I’ve found with the only exception being banks that you currently have an account with who are offering you a loan based on knowledge they already have.
Stay ‘In House’ if you can.
As I’ve mentioned above if you have a bank account already from a provider there is a good chance that they would be able to offer you a loan at a better rate than a company who doesn’t really know you. If your salary and other income are paid into that account they will know you are good for the money and I’ve personally found they can offer you terms that other institutions wouldn’t be able to. One thing I do wonder may affect this are those of you that are doing the popular ‘bank hopping’ system at the moment. This is when you move from bank to bank to claim an often £500ish reward and then once you have that you move onto the next one. It may mean that by the time you go to apply for a loan on your last and final bank that they don’t quite know what to make of you as you will have more than likely only just started out using their services.
Think long-term about your decisions.
It’s easy to be caught up in the moment of needing the money now as often it can be an urgent need for money but it is very important that you think long term about if you are able to afford the repayments. No bank is EVER going to offer you a loan at 0% so you are always going to have to repay more than you borrowed within the timeframe you agree. Sometimes you need to weigh up choosing to pay over a longer term but having a higher rate of interest so it really can be swings and roundabouts.
0% finance instead.
If you feel you need to borrow money for an appliance often taking out a 0% finance option can be a far better option and is something I have done many times before. We’ve had multiple situations in our life where the fridge freezer has broken down suddenly or the cooker and a lot of application specialists such as Currys and AO.com will offer you 0% finance deals over at least 12 months. This is the best of both worlds really as it means you get the appliance straight away and don’t end up paying more than the cost of it over the 12 month period.