Experts are warning that thanks to rising interest rates, tighter controls on awarding credit, and a huge drop in the number of secured loans on the market it is now more important than ever that those looking for a loan find the right one for them and do not pay too much for it. Predictions have recently been confirmed that there will be 18000 more residential property repossessions this year than last and the reasons for this will largely be people defaulting on mortgage repayments and failing to keep up payments on secured loans.
There are a great many price comparison sites online now that promise to do most of the work in selecting the best loan for you. However, when comparing secured loans, credit cards, personal loans and other financial products experts warn that you shouldn’t assume the websites know best all the time. Checking the fine print is still important on any product.
Many people skip over the finer details of the loan because they assume that the website will have selected the best deal for them, but moneysaving website Thrifty Scot recently said: “Check the terms and conditions. You will be surprised at how much valuable information is contained in the small print, and you will be doing yourself a real favour by reading through this before you make any commitment to the loan, as once you have signed on the dotted line it will be too late in many cases.”
Some websites like Moneysupermarket.com allow you to input your details and project predicted lending criteria, or your likely credit score. This tool is invaluable because it almost guarantees that people do not apply for a loan which will then be refused. Even those with low credit scores will only be offered loans which are appropriate to them by a comparison site which uses the grading system.
Thrifty Scot has also pointed out that in the past those searching for a loan would have to trudge between banks and they wouldn’t always have checked the eligibility criteria before applying for the loan, this is bad because “refusal could have a negative impact on your credit making it more difficult and more expensive to get future credit.”
As well as looking at the amount of interest charged on any new loan it is worth looking very seriously at the repayment period, Thrifty Scot advise. “You will find that the repayment periods offered with secured loans are far longer than those offered with unsecured loans in general. However, the repayment terms available will again vary from lender to lender and also based on the type of loan that you take out.”
Thrifty Scott also highlight just how important the repayment period on a loan is: “The longer the repayment period the longer you will have to repay the money you borrow, thus the lower your monthly repayments will be. However, also remember that on the other side of the coin the longer your repayment period the longer you will be in debt.”
It surprises some people to realise that a lower interest loan over a longer period could work out costing them more than a higher interest loan over a shorter period, so checking the details and comparing deals yourself is still necessary, even when using a comparison website.
Sarah is an author of several articles pertaining to Secured Loans. She is known for her expertise on the subject and on other Business and Finance related articles.
