Like with most major purchases, people like to shop when looking for a secured loan provider. Making such an important decision cannot be taken lightly, so it is important to assemble the full picture of information to put together the right loan package to meet their needs. Shopping around and looking into numerous options before committing to any one arrangement is an important part of the process. Comparing APRs – annual percentage rates – is the easiest way to analyse the true cost of taking out a loan from each provider, enabling the customer to see which deals will make the most financial sense. It is not always the case that the existing bank will offer the best deal.
Checking the small print for eligibility is also very important. Some lenders have conditions on their loans which mean they are only available for certain customers. Others have a more far reaching customer base, including the ability to cater to those with county court judgements or a history of poor credit rating and missed payments. Certain loan providers will be able to find you a loan which matches your credit profile, therefore checking your credit rating in advance will also help to know which deals might be suitable. Advertised APR deals must be offered to two thirds of customers in order to use the figure in the advertisements: making sure that the credit rating is a good one and likely to qualify for the advertised deal will help avoid unnecessary applications. Too many applications leave ‘footprint’ trails in the credit history which does not look attractive to future lenders. Again, specialist loan providers can perform soft searches on your behalf, where an initial search is done before the formal process, to make sure no negative track is left on your credit history. By using a soft search you can get quotes before you apply for a deal, and then only proceed if you are certain it is suitable and likely to be approved. In addition, there can also be numerous charges put on customers. As well as the obvious fees for missed payments or defaulting on the loan, there can also be other administrative fees and even early repayment charges. Whilst it might seem alien to consider the end of the loan at the outset, these early termination fees can be substantial and need to be accounted for if there is a possibility that the loan period will end early.
Although payment protection insurance is often in the news as a negative force in the market, for those who might have issues making payments due to illness or unemployment, having a PPI arrangement can protect them from difficulties. Looking for these arrangements separately rather than taking the deal offered by the lender can lead to additional savings.
Finally, consider whether a secured loan could meet your needs. Due to the fact that these use property as a guarantee on the loan, the interest rates are often able to be significantly lower. Of course these carry their own risks, but for many people are a better solution than unsecured borrowing or a credit card.