Getting the best personal loan
Personal loans are one of the most common forms of credit available. Obtaining a personal loan can often be straightforward and easy. If you need access to a significant amount of funds quickly, there is probably no better way to do this than through applying for a personal loan. However, before applying for a personal loan there are many things you should consider. The more informed you are as a consumer the better choice you will make. Here are some things you should take into consideration to ensure that you get the best deal possible when applying for a loan.
The cleaner your credit record the better the offers
With literally thousands of loan products available in Australia at the moment, there are loans to suit all financial situations. These loan products have varying interest rates from the very low to the very high. The discrepancy between these interest rates is designed to accommodate different financial situations and credit histories. Whilst everyone wants the best deal possible, some peoples poor financial situation limits there options to loans with high interest rates.
The better your credit history the better value the loans available to you will be. However, for those of us with a bad credit history traditional lenders generally make it difficult for us to apply for credit, even if your days of financial trouble are behind you. People in this situation are forced to apply for the higher rate loans. If you have a bad credit rating then you will only be eligible for a very small percentage of conforming loan products in the marketplace and most of those will have unfavourable terms.
However, increasingly non conforming loans are becoming more popular. Some of these non-conforming loans offer favourable terms for borrowers with poor credit history. The inflexibility of traditional lenders is one of the driving forces behind the increased popularity of non-conforming loans.
Interest rates are not the only factor to consider
Many consumers take only the interest rate into account when looking for a loan. Whilst this is important, it is not the only factor to take into account. To be an informed consumer you should also consider:
- Is that loan secured or unsecured?
- What are the penalties for late payment?
- What are the penalties for early repayment?
- Is the interest rate fixed?
These are just a few questions that can help you understand the real value of your loan. By being informed you can avoid being stung by massive fees and unfavourable terms.
Choose the shortest term you can
It is a simple proposition that the longer you hold your loan for, the more interest you pay on it. This applies to all forms of credit, from credit cards to mortgages. By shortening the term of your loan you can save thousands in interest.
The most common term length for personal loans is 5 years (60 months). People choose this term length so that they can make the lowest monthly repayments possible. By opting for a shorter term, for example 3 or 4 years, you can significantly reduce the amount of interest you are paying while only slightly increasing your monthly repayments.
Find a loan that doesn’t penalise you for early repayment
With so many loans available, it helps to be informed of the specific terms and conditions of the loans you are thinking of applying for. It is likely that each loan will have a unique set of terms and conditions that you have to follow. It is common of the lower interest loans to have strict penalties against early payment. As a consequence, if you think that you may be able to pay off your loan early you should look for a loan that does not penalise early payouts. For example if you are due for a lump sum or a bonus that can effectively pay out the debt, you should seek out a loan that does not penalise early payments.
If you would like Debt Relief to assist you with finding the best personal loan for your situation then fill in the following form or call Debt Relief on 1300 658 662 8am - 8pm 7 days a week.
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