You happily log in to your email and what do you find? An astonishingly large number of friendly and reassuring messages sent to you from a wide variety of lenders, offering you the greatest loan deals that you are ever likely to come across. As though sending you these messages wasn’t enough, you are also likely to be bombarded with offers placed on websites as well.
The problem is not in finding companies that offer loans with good deals, but quite the reverse. The problem lies in trying to identify what the differences are between the various loans and options available, and deciding what is best for you.
Obviously a great deal will depend upon your own background. If you are in full time work, or retired, own your own home, or are renting, and whether you have a good credit background are all factors which will make a difference to your eligibility.
Another factor which significantly affects the type of loan that you will be able to obtain is the speed with which you need access to the funds, and also of course, the time period over which you will pay it back. For example, a quick and easy solution for many is the ‘pay day’ loan. This is where you receive a relatively small loan, that is payable from your next pay cheque. Because of the short period of time, the interest has little time to accrue, although the rate will be substantially higher than those loans payable over much longer periods.
However, the most competitive rates on the market will be for loans which are secured, usually on property. These gives the lender the reassurance of knowing that their money is reasonably safe, and that should all else fail, they have a good chance of receiving most, if not all, of the funds back. As a result, these companies will be extremely competitive, and provide far better terms.
As would be expected, those borrowers who are in well paid, full time employment and who are fortunate enough to have managed to keep a clean credit file in the past, and who have capital against which any loan can be secured, will be able to take advantage of the best rates, and are therefore advised to shop around carefully first.
Of course, not everyone is lucky enough to be in such a position, and there is an increasing market for those whose circumstances leave much to be desired. Many lenders will be able to offer deals to these people, although the rates and terms are far less competitive. Nonetheless, there is still much variation in the products available, and it is still very much to be advised to research the market first. Often, though, it is the very people who can least afford to enter an agreement that is very uncompetitive that do so, usually because their circumstances lead them to need the funds quickly.
As a result, these borrowers often find themselves tied in to a long term loan arrangement with a very high rate of interest, and find that the total amount repayable is far greater than it would had they spent longer doing their research first. The need to do your homework first cannot be over emphasised.
Add A Comment