are thinking about taking out a personal loan, then
there are a number of things you should be aware of before signing
anything. Although personal loans can be extremely useful for paying
off debts or improving your cash flow, if you make mistakes
then you can end up in financial trouble. If you know about
these common personal loan mistakes and how to avoid them then you
will find the right loan for your needs.
too many quotes
shopping around for your loan is important, you should also
remember not to get too many detailed quotes from lenders.
Every time you apply for a loan or get a detailed quote, the lender
in question has to pull up your credit report. If you credit report
is continuously being looked at or loan applications turned down,
then your credit rating will suffer. This will affect your chances
of getting the loan that you want. Shop around as much as you
want to compare prices and interest rates, but do not make applications
until you are sure the lender is the right one for you.
be tempting when applying for a loan to hide your past financial problems,
or to stretch the truth when it comes to your earnings. If
you do this it is likely to end up with you being refused for a loan,
or even being in trouble for giving false information. If
you have had credit problems in the past and have recovered from them,
this is often seen as a positive sign because lenders can see that
you honour your commitments and are able to get yourself out of problems.
If you are honest then you will get more competitive terms and
will not get yourself into legal trouble.
more than you can repay
the most common mistakes people make is to borrow more than
they can repay. This is especially true if you get a secured
loan, because the lender is less concerned if you pay or not as they
have some collateral in place. You need to be honest with yourself
and work out a strict budget. Only agree to a loan that you know
you can pay back not only now but when times are hard. If you do this
then your loan will help you improve your financial status rather
than to make your problems worse.
in promotional advertising
taking out loans, too many people focus on the promotional
interest rates that companies offer. Although these interest
rates seem like an amazing deal, you rarely end up being eligible
for such a low rate. Even if you can get a very low rate, there
are often hidden charges to consider that are not mentioned. Instead
of looking at APR, look at how much you have to repay in total,
as this is the more important figure. If you go to a responsible lender
then their fees and charges should be transparent and clear, and you
will get a deal that will suit your needs and not leave you paying
more than you should be.
About the Author
Peter Kenny is a writer for creditcards-gb.co.uk.
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