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Compare loans
Compare Loans:
Advice on Shopping for Loans

Loans come in all shapes and sizes. With so many loan offers coming at you from all directions, choosing the right one can be difficult. However, if you are prepared do some careful homework and compare loans and interest rates, you will be able to find a loan that is perfect for your needs.

As long as you have a reasonably good credit record, securing a loan nowadays is a relatively trouble-free process which can be completed quickly over the telephone or online.

Finding a loan

The traditional route to find a loan is through a bank or credit union. However, there are now many good deals to be found through non-traditional routes. Generally speaking, you can compare loans and get a better deal through an online specialist loan provider, but this depends on your requirements.

Some borrowers prefer using the services of a broker. Most brokers claim to help find you a loan at the lowest possible rate. They earn a commission from the loan provider, not through you. However, be aware that some brokers may charge you an arrangement fee.


Home loans

The largest loan which most people have to take up is a mortgage to enable them to buy their home. Before you choose a mortgage, it's good to compare loans to find the best one for your needs. The most common types of home loans are as follows:

  • Repayment

  • Interest-Only

  • Tracker

  • Self-Certification

  • Sub-Prime

  • Capped Rate

  • Fixed Rate

  • Flexible Rate

  • Current Account

  • First Time Buyer Mortgages

  • Commercial

  • Buy-To-Lease

  • Equity Release

Other types of loans  

Apart from home loans, there is an enormous range of loans on offer to cater for practically every need: 

  • Car Loans

  • Home Improvement Loans

  • Wedding Loans

  • Student Loans

  • Career Development Loans

  • Self-Employment Loans

  • Business Loans

  • Personal Loans

  • Bad Credit Loans

  • Payday Loans

Choosing the right loan

Deciding which loan is right for you essentially comes down to balancing these two factors—the amount you want to borrow and the time you think it will realistically take to repay the loan.

When you compare loans, be aware that most loans are repaid in monthly installments over an agreed period. The longer the repayment period, the more interest you will pay. Try to borrow as little as possible and repay as quickly as possible. To avoid complications, sit down, prepare a budget, and ask for only what you can comfortably afford to repay. Over-borrowing can lead to debts that may spiral out of control.

Compare loans and interest rates

Do not be attracted to low interest rates as these types of loans are normally not as good as they appear. Instead, consider not just the APR, but the TAR which is the Total Amount Repayable. This will tell you precisely how much you will ultimately have to pay back when you compare loans and interest rates.

Exit or redemption penalties and overhanging lock-ins

Beware of lenders who impose heavy penalties if you wish to:

  • Repay your mortgage or loan earlier than initially agreed.

  • Exit from the mortgage or loan and move to another lender or deal.

  • Switch deals or lenders after a special deal interest rate has expired.

Secured vs. unsecured loans

Most loans you apply for can be taken up either as a secured or unsecured loan. If you take out a large secured loan, you will be expected to put up a valuable asset—usually your home—as collateral against the loan. Interest rates for secured loans are better as lenders have your asset as security. Sometimes, borrowers use their car as a form of security.

An unsecured loan normally carries a higher interest rate as you are not required to put up any collateral. However, it can be viewed as a safer loan as there is no risk of losing your home even if you fail to make repayments.

Credit history

Before approving any sort of loan, all lenders will refer to your credit history record. Your personal credit score will determine whether you will be granted the loan for which you have applied. Different lenders have different criteria, but all will use credit reference agencies to assess your credit history.

If you have a poor credit history as a result of arrears or even bankruptcy, you may have to resort to applying for bad credit loans. If you believe your credit history is inaccurate, you can ask the credit agency to investigate and if appropriate, amend your records.

Insurance

When you shop around for loans and when you compare loans, decide whether it is useful to take out payment protection insurance. PPIs are not obligatory, but can come in useful if you are suddenly faced with not being able to cover your repayments due to unemployment, sickness, or accident.

Always compare loans and loan features before making a final decision.

Compare the best personal loans

 
 
 
 
 
 
 
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