How to train your personal loan

Banks will make their best personal loan offers, but only you can know what best suits your needs

08:11 12 September 2013

Taking up a personal loan is a great risk with the current UK economy, but if you actually need it, there are some ways of “training” your personal loan so that it best fits your needs. Here are the things you should look for before signing on any offer.

• First of all, you should make sure that the bank does not hide anything from you when presenting their offer. Some ways in which they may mislead you are by setting up a fixed rate for the personal loan that actually does not stay fixed for a long time. You have to double check each document before signing!

 

• Decrease your interest rate as much as you can! This can be done by improving your credit rating (which is determined by your past loaning behaviour) or decreasing the loan term as much as possible. The longer the term is, the more expensive the personal loan becomes.

 

• Try to borrow as less as you can. Interests are calculated according to how much you borrow, so a larger amount leads to a higher repay cost for your personal loan. Only borrow for things you most definitely need, do not stretch that loan to cover for things you would want but don't actually need.

 

• Try to find an interest-free loan alternative to the personal loan. However, you can only accomplish this if you don't need to borrow a large amount of money.

 

• The last thing you need to know is that you definitely need to compare personal loan offers from different banks! Do not just go into your bank thinking that you are a regular costumer and will be treated accordingly. This is always a mistake when operating on the financial market.