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Quick Guide To UK Personal Loans for 2013

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Loans Guide for 2013
Loans Guide for 2013

Personal loans are a very tempting and popular way of borrowing money, but if you’ve never gone down this road before, you should cautious of the pitfalls and hidden traps. The obvious one is the excessive amount of interest charged.

A personal loan usually falls into the £5,000 to £25,000 bracket, and anyone aged over 18 (some lenders require an age of 21) can apply for one.
Loan rates of interest charged on personal loans can vary from 6% APR (Annual Percentage Rates) to 13% APR, but be warned, any lenders eager and keen to have you onboard may charge a lot more and should be avoided.
Types of Loan
If you approach a bank or building society, ensure whether you are taking out a ‘secured’ or an ‘unsecured’ loan – this is imperative as a secured loan means that you have secured it on your home to pay it off in the event that you default in payment. Unsecured is the route to go as do not have to put up collateral, meaning your home cannot be repossessed.
Try and avoid inflexible fixed-term loans, as this means you won’t have to pay a redemption penalty (usually two months’ interest if you want to pay off the loan early).
Take Stock of What Your Being Offered
A lot of lenders quote competitive rates to lure you in, but be wary of any hidden provisos, like having to take out cover for any sickness or unemployment – this could make a substantial difference in the overall cost, perhaps even more than a lender with a slightly higher quote but with no hidden provisos. Simply put: research and know the terms of the loan before signing up. Always check the policy’s small print.
Online Loan Calculators

Using a Loan Calculator is a Good Idea
Using a Loan Calculator is a Good Idea
Have a look online as some lenders have their own calculators, and most questions can be answered should you choose to go ahead further.
Clydesdale Bank are a good example, their site easy to navigate for information, plus Clydesdale Bank have their own loan calculator and other online tools for applying online.
Small Purchases
If your loan is for a small purchase(s), borrowing on your credit card is probably a better solution. Choosing a credit card with good rates means you could pay off the debt after only a few months, working out cheaper than borrowing through a personal loan.
Another aspect of a personal loan is to if you are being charged interest on a daily or a monthly basis – usually, lenders charge on a monthly basis, which can make a huge difference to those who want to pay off a loan early.
You should also look out for ‘flexible’ or ‘revolving door loans.’ These do allow you to borrow and pay back whenever you want, but the rates of interest can also be uncompetitive.

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