Loans

Loans: Things to Consider

When considering whether to take a loan you should first consider a number of things.

Firstly, what is the purpose of the loan you are considering? If the loan is being considered to purchase a non essential item, maybe a new electrical appliance or a holiday ask yourself how much importance do you really attach to these things. Any loan will have interest charged on the loan and interest rates on loans are generally charged on a compound interest basis.

Where a loan has compound interest charged on it this means that as well as paying back the loan plus interest you will pay back the loan plus interest on the interest. All lenders need to make a profit on their services so the idea of charging interest on interest is perhaps understandable. The point to realise is that the actual amount repaid to the lender can be significantly more than the original amount of the loan borrowed. With some loans the amount actual amount repaid can be as much as three times the amount of the original loan.

Since the amount you will repay on the loan will be so much more than the original amount borrowed consider whether you would be better off saving in advance rather than making the purchase and saving afterwards to repay the loan and interest save in advance and make the purchase when you have saved enough money. If you do choose to save in advance of the purchase then read some of the articles on this financial products web site and choose a savings account or a current account depending on how long you will be saving before making the purchase.

The are a wide variety of lenders out there that offer both fixed rate interest or variable rate interest charged on the money that as borrowed as the loan. So if the purpose of the loan is for an essential purpose or you choose not to save before making the purchase consider carefully whether to choose a fixed or variable rate loan.

There are advantages and disadvantages that apply to both fixed rate loans and variable rate loans. With a fixed rate loan the amount of interest charged over the period of the loan remains constant and is generally fixed as a percentage of the initial loan amount. One big advantage of a fixed rate loan is that the borrower will always know the amount of each repayment and this can make it easier to assess whether as the borrower you can comfortably afford the repayments on the loan.

One disadvantage with a fixed rate loan is that if interest rates charged by banks are low or reduce during the term of the loan then the fixed rate of interest charged by the lender can often be more than the amount of interest charged on a variable rate loan. This of course means that you will be repaying even more back on the loan to the lender.

With a variable rate loan the interest rate charged on the loan can go up and down depending on the base rate of the bank of England . The advantage of a variable rate loan is that when bank of England base rates are low the interest rate charged on the loan will be lower than that foe fixed rate loans. Variable rate loans are therefore best considered when base rates are low and where the loan will be short term. If the loan will be repaid over a long period then it may offer the borrower more peace of mind and certainty if a fixed rate loan is chosen as you can calculate in advance the repayments and unless your financial circumstances change you will know that you will be able to afford the repayments on the loan.

It should hopefully be clear from the above that the type of loan that you might wish to apply for will depend very much on your own personal circumstances. This website features some of the best options available. If you take the time to browse some of the loan options that are available and have a look at both the fixed rate loans and the variable rate loans you will be able to get a clearer idea of which loan suits you best. If you are still in any doubt as to which loan suits your circumstances best then take advice from an independent financial adviser.

This article does not cover secured loans. There are a number of other articles within this website that cover both secured and unsecured loans.

Car Loans are on of the most popular loans people take out. The reason being is most people cannot afford to buy a decent car out right. We explain everything there is to know about car loans.

If you want to take a different direction in your career the why don't you think about getting UK Career Development Loan. This can pay towards work related training and education. Many people these days take advanteage of these to improve their skills or learn a completely new trade.

There are many popular UK loans available. They are popular because people feel they make their lives easier and even improve their quality of life. There are secured loans and unsecured loans.

Whether you are starting a new business or expanding an exsisting business, it is common to take out a business loan to fund the enterprise.

Self employed people often want to take out loans as well, but because banks consider them more of a risk they often have to take out specially designed financial products. One of these is a self employed loan.

Mortgages are as you know a form of loan which is secured on you house and used to purchase your house. We investigate the details of how mortgages work.

Home owners often want to borrow large amounts for home improvements, finance a business venture or for many other reasons. Because they own there own house they can remortgage it and borrow extra amounts secured by their home. This is called a remortgage.

When people have to much debt in the form of loans, credit cards, store cards and hire purchase they sometimes find it hard to keep on top of all their monthly payments. Therefore some decide to take out debt consolidation loans. This is a loan you take out to pay off all the other loans so that you only have one monthly loan to pay off each month.

We look in more detail at personal loans and how they work. What you need to know about them and how to get one in this very interesting document.

Students often do not have the financial resorces to fund their education and therefore require student loans.

The unemployed often are in need of finance and this is why banks have introduced unemployed loans. It enables them to buy a car for the family or other goods they need for their day to day life.

Shannon who has previously written for UK Financial Options also give her insight into unemployed loans.

We discover how early repayment of a loan can incur extra charges redemption penalties. We look at how to avoid these in future by taking out loans that do not have these in the aggreement and how to find out if you will incur these charges with your current loans.

It is often wise to take out payment protection insurance on a loan when you get a loan. We will explain how this protects you and how this insurance works if you fall on hard times.

Bad Credit Loans - These are loans specifically for people with a bad credit score.

Home loan - These loans are associated with people buying a home. We tell you all there is know about these popular loans.

Payday Loans - These are short term loans until you get paid. There are hundreds of lenders on the internet. We show you how to get one.

Unemployed Loans by Terry Smith - This very exciting new paper on employed loans is written from the point of view of a man who has worked in finacial institutions who spcialise in this type of financial product.

Loans on the internet - There are hundreds of loans available on the internet. Infact we even have loans in comparison table at the top of this page.