Things to Consider Before Getting a Loan
October 27, 2015
However much you need to borrow, it makes sense to take a few simple steps to ensure you take out the right loan for your individual circumstances.
And as there are lots of different ways to borrow money, the first question to ask is whether a loan is the best option for you.
Here, we explain how to make this decision and highlight some of the other things to check before taking out a loan.
Is a loan the right choice?
When considering how to access the extra cash you need, it is important to think about how much you need to borrow and over what timeframe.
Those wanting to borrow small amounts over a short term, for example, may be better using an overdraft or 0% credit card.
And those needing a larger cash injection may want to consider extending their mortgage rather than taking out a separate secured loan.
Have you checked your credit file?
Your credit score has a significant impact both on the interest rate you will pay on a loan, and the amount you will be able to borrow.
As rejected credit applications have a detrimental effect on your score, it therefore makes sense to check your credit file first to see whether you are likely to be approved or not.
Can you afford the repayments?
Before taking out a loan of any kind, it is vital to ensure that you will be able to afford the repayments you are signing up for.
Otherwise, you risk being hit with penalty charges, not to mention damaging your credit file and therefore your chances of being accepted for the top deals in the future.
If you have used your home as security, falling behind with your payments will also mean putting it at risk.