Money. Everyone wants it, not everyone has it. When you need money there are a number of places you can turn to, but what should you look at before you get a loan?
Can You Afford It?
Before you decide whether to get a loan, you must determine whether you can afford the repayments for it. This means delving into the joys of budgeting- looking at your own finances in order to determine what you can and cannot afford to repay over the loan period.
Similarly, some loan companies may penalise you for repaying your loan early. If you would like the option to do this, check terms and conditions carefully to avoid unwanted charges.
Before committing to a loan, shop around. Get to know the pros and cons of each loan. The more you look, the more you’ll get an idea of what will work for you and what won’t. In particular look at the total cost of repayments over the loan term.
Check The APR
When advertising loans and interest rates, companies will use the phrase ‘Representative APR‘. Representative APR refers to the APR which 51% of customers will receive having responded to that particular piece of marketing. Therefore not all customers will be charged this interest rate and the interest you’re charged for your loan may be higher or lower than the advertised rate.
Know The Risks
Personal loans are everywhere and it seems that everyone can get a loan with money hitting your bank account in minutes. Whilst this is very convenient, it’s essential you understand the risks
involved in borrowing money and make a considered decision.
If your circumstances change and you can’t afford to repay your loan, will extra costs be added to your loan?
If you can no longer afford to make repayments, is your home at risk? This is the case if you take out a loan secured on your home.
Taking the time to understand what risks you could face will ensure there’s no extra surprises should your circumstances change. Any responsible lender will be happy to discuss those with you.
Any business lending money needs to be authorised by the Financial Conduct Authority (FCA). By being on the FCA register, money lenders are being monitored by the FCA to ensure that customers are being treated fairly.
Will You Be Allowed To Borrow That Amount?
If you’re continually applying for loans which you’re being turned down for, this will show on your credit report with the credit reference agency. If you have a bad credit rating, you could try requesting a loan for less money which you’re more likely to be accepted for. Once you make repayments for the loan, this may help you rebuild your credit rating so the next time you need to borrow money, you could borrow more.
Is It Worth It?
When taking out a bigger loan, it’s important to understand the repayment time scales and repayments for the amount borrowed- is it worth it?
Right Of Withdrawal
With any loan there’s a right of withdrawal, which gives you 14 days to change your mind. During this time you can cancel your agreement at any point. The cooling off period starts either from the date of the loan agreement or the date when you received your copy of the agreement- whichever is latest.
If you decide you’d like to cancel your loan agreement within the withdrawal period, you must contact the company directly either by telephone, email or letter and inform them of your wish to cancel your loan.
If you do cancel your loan, you’ll need to repay the money borrowed plus any interest within 30 days of date the loan was cancelled.