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.
But how is it possible to sift through all of these offers, which seem so readily available, and decide for yourself what type of loan will serve your needs best. With so many types on offer, it can seem a daunting task.
There will, naturally, be a variety of reasons why you will be eligible for different rates and terms. Your employment and credit history, whether you own property and the time scale for repayment will all make a significant difference.
A significant deciding factor in determining how good a rate you will be able to obtain will depend on how urgently you need the money, and whether you intend to pay it back quite quickly, or spread out over a longer period of time. A short term arrangement, such as a ‘pay day’ loan, is often only spread over three or four weeks, and is paid back in full from your next salary payment. Although the rate of interest is substantial, if paid off quickly it can be a positive solution for many.
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.
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