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UK PROPERTY NEWS & ADVICE


A Brief Guide to Personal Loans

In today’s society many people are stretched financially and sometimes find themselves short of money to pay bills or basic living costs. Depending on what is prioritised you may find you still have to find funds to pay for insurance, phone bills, tuition fees or even necessities such as food, clothing or rent.

One longer-term solution that some people follow is to take out a personal loan and pay it off on a monthly basis. Depending on the deal you get this can turn out to be a blessing or a burden. Many people now look sites such as uSwitch or The Motley Fool’s loans comparison site for advice on the best deals around at the moment.

As well as reading content on these types of site you should also not be shy to ask lenders any questions you may have. Remember that a personal loan is a long term commitment so you should always understand fully what you are getting and ask if you don’t.

Always be sure to work out how much you can realistically afford to pay back on time and work out how much you should borrow from that. Stick to this figure and then think if the loan is the right option for you.

A sensible measure before you take the plunge and borrow money is to make use of a Loans calculator – they’re pretty straightforward and can be found on most lenders websites. The calculator on the Natwest Loans page, for instance, allows prospective borrows to enter the amount they want to borrow and the timescale they would prefer to pay it back over and gives them the monthly payment and the total amount payable; say you wanted to borrow £5000 and pay it back over 4 years the calculator will inform you that your monthly payment would be £214.72 (including Loan protection) and that the total amount payable would be £10,306.56. Remember that is not definitive, the actual deal will depend on your circumstances, but it is a quick and handy indicator of what you could expect and should help you gauge whether you think you can afford it . You could then compare that deal with another lender.

Here’s a quick breakdown of some of the major lenders current personal loan deals (at the time of writing):

Lender

Loan Type

Typical Rate

ASDA Finance

Personal Loans

Typical 6.9%

Natwest

Personal Loans

Typical 6.9%

RBS

Personal Loans

Typical 6.9%

Alliance & Leicester

Personal Loans

Typical 6.5%

Moneyback Bank

Personal Loans

Typical 6.3%

Never procrastinate if you get into any difficulties with payments and remember that if you overstretch and cannot pay off the loan it could potentially impact you in the future as it will stay on your credit record. Contact your lender as soon as possible and try and work out an arrangement.

However you borrow just remember to research and budget.

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