Choosing A Personal Loan Can Be Harder Than You Think
$1.2trillion.
$1.2trillion.According to the Sydney Morning Herald, this staggering figure is the total consumer credit lending to individuals in Australia at the end of December 2009.
William Shakespeare told us in Hamlet that borrowing dulls the edge of husbandry. Despite this warning four hundred years ago, Australia has become a nation of borrowers. Every man, woman and child in Australia owes, on average, $56,000.
If you are looking for a personal loan, you may be wondering where to start. With many options available, choosing a personal loan can be a minefield. Thats why weve come up with these five great tips to help you choose the loan that is right for you.
Do you actually need a loan?
This is the first question that you should ask yourself.
Have you fully considered all the options open to you? Do you have savings or other cash you can use instead of a loan? Are there savings you can make on a monthly basis to afford the items you want?
If the loan is to buy something, you should consider whether it would be better to delay the purchase until you have saved more money to put towards it.
Check your credit rating
Almost all personal loan lenders will use credit scoring to determine if they will agree your loan application. A loan company is likely to check your credit file to establish how you have managed credit in the past.
The healthier your credit file, the more likely it is that you will be offered the best loan rates. It is therefore worth obtaining your credit file to make sure all the information on your file is correct and up to date.
Check the comparison rate
The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. Many best buy tables rank loans by their comparison rate and so it is a useful way of comparing one loan to another.
Fixed or variable?
As with many other financial products, personal loan rates are available on a fixed or variable rate basis. You might prefer the security of knowing exactly what your repayments will be with a fixed rate, or you may wish to take advantage of the flexibility of a variable rate loan.
Loyalty Can Pay
A fast-growing trend amongst financial institutions in Australia is to offer preferential loan rates to existing customers. More and more banks and other lenders are offering great loan rates - but only to their bank account, credit card or savings customers.
If your bank doesnt offer you such a rate, you need to make a decision on whether it is worth switching bank accounts in order to access to a great personal loan rate with another provider.
by: Aaron Zaias