Applying for a loan can be a struggle especially if you’re new to loans and lending. Loans can be confusing, and to compare loans can be challenging. There are so many types of loans to compare and choose the best among the rest is not an easy task when you’re not familiar with them.
It’s easy to get lost in all the jargons and fancy lingos in the world of loans. You’d end up taking out a loan that you haven’t fully understand. You need to have sufficient knowledge about loans to compare loans effectively.
Remember that each time your loan application is rejected, it will negatively impact your credit record. Therefore, only apply for loans that you are confident you will be approved for. However, searching and comparing loans won’t hurt your credit rating.
When you compare loans, look into the lender, the loan product, the representative APR, total loan cost, and the possible monthly cost. This way, it’ll be easy for you to find the loan that’s right for your current financial situation.
What’s the APR to Help You Compare Loans?
APR or annual percentage rate shows you the real rate of interest that you will be paying throughout a year including interest, other charges, and service fee. However, note that the advertised APR of the lender may not be the APR you’ll get.
Chances are, only about 51% of the lender’s customers could usually be granted the advertised APR. You could get a slightly higher or lower rate depending on your personal circumstances.
The APR is dependent on certain factors such as your credit rating, the amount you will borrow, the repayment period, and many others. If you have a good credit rating, you’ll likely get a cheaper loan.
The APR is usually the first thing you want to look into when you compare loans. The lower the APR, the better the deal is.
How much are the total loans cost to help you compare loans?
Consider the total loan cost when you compare loans. This is the entire amount you need to pay back the lender, which include the amount borrowed, fees, and interest over the period the loan is taken out.
The total loan cost might change if the APR your lender provides changes. This usually happens with loans with variable interest rate. Fixed rate loans are options that are more favorable.
Is the interest fixed or variable?
When you compare loans, be sure to check out the type of interest rate the lender applies. The type of interest used by the lender on the loan has an impact on the total cost of the loan itself.
Fixed interest rate means the cost will remain the same throughout the duration of the loan term. Variable interest rate can change any time, may it become higher or lower. While you can save from variable interest when it’s lower, your monthly repayment won’t be the same. With a fixed interest, you can make a clear budget on your monthly expenses.
What is the repayment period to help you compare loans?
Repayment period or the loan term can be short-term or long-term. Short-term loans are payable over one to three years, while long-term loans are anything over three years and can reach up to three decades. There are also short-term loans that are over as short as two to four weeks or less than a year.
Short-term loans are usually small borrowings, while longer duration loans are for huge purchase and expenditures like vehicle purchase, weddings, home extensions or mortgage. Short-term loans are ideal for emergency expenditures.
What are the other features to help you compare loans?
You’ll find lenders offer early loan settlement where you are allowed to pay off your loan before the end of the agreed loan term. While some lenders provide this option without any charges, others may charge a certain fee. Small as it may seem, but this is a helpful consideration when you compare loans.
Purchase a Vehicle
If you wish to get a new vehicle, whether it’s a car or van, a loan can be cheaper than car dealer finance. Getting a car loan will make you a cash buyer. It is the best start for getting a great deal on your new car.
It is a good idea to combine all your debts together into one loan because this will help you settle them easily. Some of your existing loans may have very high interest rate. Consolidating them into one with a much lower interest rate would be a good option.
Improve Your Home
Home extension, improvements, and renovations are a great way to add value to your home. There are many lenders offering loans specifically for this purpose.
Spending for Your Big Day
A wedding is like a one-of-a-lifetime occasion, so it’s really important to make it an unforgettable one. However, it’s no secret that it can also be a very expensive one. It is not surprising that many couples need to take out a loan to cover the cost of their big day. Low-interest personal loans are everywhere. A personal loan is one of the easiest and most convenient ways to fund the cost of tying the knot.
Getting a Personal Loan
These loans are mostly unsecured loan, which is based solely on your personal circumstances, such as your earning and your monthly expenses. Lenders rely on your creditworthiness with these types of loans. As its name suggests, you can use a personal loan for any personal expense such as vacation, purchases, and more.
Getting a Secured Loan
These loans secured against your property, so that you must be a homeowner either own outright or have a mortgage for you to qualify for this type of loan. However, note that if you fail to make repayments, the lender may seize the property you put up to secure the loan. The lender will have to sell it and use the money to pay up the loan.
Getting a Loan with Bad Credit
If you have a poor or bad credit rating, it’s likely that you’ll find it difficult to get a loan approved. You can find many lenders online who specialise in bad credit loans. These loans are usually short-term with high interest rate, but you can still get a good deal. Take time to compare loans and the rates and fees as well as other features of the loan offer in order for you to get the cheapest bad credit loan possible.
Compare loans for bad credit and choose whether to get a payday loan, doorstep loan, logbook loan, quick personal loans, guarantor loans, and much more.
Loans for Young People or First-time Borrowers
Most people need cash even while they are still students or while they are just starting their career. The most viable alternative for students is a federal student loan, which is payable once you start working. Aside from the government, there are also many banks and private lenders offering competitive student loans.
If you haven’t established yet a solid credit history, guarantor loans are your best option. A guarantor can be a close friend or family member with a good credit history and stable income. He or she will co-sign the loan with you as a guarantee. This way, the guarantor pledges to take responsibility for the loan if in any case, you would fail to repay the loan.