Not so long ago if you wanted to take out a loan you had little chance to compare loans, and little choice about where you borrowed. It was either the high street bank, or a building society or friendly society. And the amount you borrowed was severely restricted too. You were mostly relying on the generosity of the bank manager and hoping that your credit record was good enough. If not, then too bad – no loan for you.
Today you are spoiled for choice. Banks and building societies compete with each other endlessly. The situation has almost gotten out of hand with the people throughout Britain owing in excess of one trillion pounds. That’s a whole lot of money! And that’s why it’s important that you carefully compare loans when it comes time to borrow any sizeable amount of money.
Loans are not all made equal. You have to read the small print carefully, or have someone who is qualified explain it all to you. For example, if you found yourself in a position in say a year’s time to pay off a loan that was intended to run for five years, would you be able to do so without incurring a penalty? You should always try to build in as much flexibility as possible into any loan you take out.
Loans come in two basic flavors: secured and unsecured. A secured loan is one where something you own of value, usually your house, is used to secure the loan. If you fail to pay back the loan then your house, or whatever secured the loan, is forfeit by you. An unsecured loan, or personal loan, is one where there is nothing securing the loan. These kinds of loans are usually for lesser amounts, and your credit history becomes an important factor in the decision of whether or not you get the loan.
Both secured and unsecured loans can have many similar features that you should take into account when you compare loans. One of the most important things to consider is the interest that will be charged on the loan. Obviously, the lower the interest rate charged the better, as you will have to pay less back overall. Generally speaking, the better secured the loan is, and the better your credit history is, the better the chances are that you will get a low interest rate charged.
Payment protection insurance is common. As the name suggests, it protects your payment ability. If for whatever reason you become unable to make a payment, then you can draw on the payment protection insurance without incurring problems. Of course, you should always look carefully at your personal circumstances, both in the present and what you reasonably expect to be the case in the future. The unforeseen can always happen, and no one can guard against it, but you can prepare for what is likely or expected.
There is a lot to consider when you compare loans. You should never just accept a loan because it’s from your bank who knows you well, which will make it easier all round. By looking carefully at what is on offer you can usually get a much better deal that will be better tailored to you. The organisations that lend money are not doing anyone a favour; it is a business transaction where you help them, and they help you. Always keep that in mind when you compare loans and it will help you to make the right decision every time.