Personal Loans; Tips and Guidelines for the Borrower - SBA Loans

Personal loans are simply defined as a type of loan granted for personal use such as financing a medical bill, family vacation, education, extension and repair of a household, or the purchase of an object for personal use. It is the opposite of a business loan which is for commercial use. Here are some useful tips for those considering taking out personal loans.

Taking out loans is a complicated process, a lot of factors are to be considered and one of those factors is the lending company itself. With any financial product, it really pays to search around and compare annual percentage rates (APRs). The APRs tell you the real cost of the loan, taking into consideration the charges, interest that are payable and when the payments are due.

The bank may claim it offers preferential rates but there are other offers that are acceptably cheaper, Example, Natwest customers are offered an APR of 7.9%, but this rate is 2.3% higher than that by Derbyshire BS.

Before applying for a loan, check the small print first; determine if you are indeed eligible, some of the best lending companies have stringent and onerous terms and conditions. Let?s take Sainsbury Bank for example; the bank requires applicants to have a Nectar Card which must be used at Sainsbury for the past 6 months. RBS and NatWest, on the other hand, offer the best rates to its current clients.

• Check on Early Repayment Charges

Though it seems unlikely, there is a possibility you might be able to repay your loan earlier than it?s due. A lot of loan providers place a charge if you pay early, so it is a good idea to check the early repayment charges before applying for the loan. If you think there is an increased chance you might be able to pay the debt early; then try to scour for deals that don?t have early repayment charges.

PPI stands for Payment Protection Insurance, it has a bad reputation but this can be useful for some people. This insurance is designed to cover credit card repayments or monthly loans if you were unable to complete them due to unemployment or sickness. If you want to have this protection, it is important to look for cheap or reasonable deals. Buying directly from a lender would cost more compared to a standalone provider. Look for exclusions as well, usually PPIs come with a long list, so it is important to completely familiarize yourself with these exclusions, know and fully understand those not covered by the policy.

• Have your Credit Card Rating Checked

If you have plans for a market leading personal loan, it is very important have your credit ratings checked. If your credit rating is not in a good shape, you might be offered a more expensive rate compared to the rate you are applying for originally.

• How About Other Forms of Credit?

Other forms of credit might offer a cheaper deal. You might bump into a cheaper credit card or a credit card with a 0% introductory offer. This would enable you to spread the cost of purchases free of interest. Tesco bank offers the longest 0% deal at 16 months, but if you think you cannot repay the debt within the 0% offered period, it would be best to go with the low rate long term deals. Know more about loans at?txtloan website.

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This article on personal loans is written by Grace Adams, author of web based articles on?loans and credit management and finance management. Grace offers practical yet useful tips to people applying for loans.

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Source: http://www.sbaloans-123.com/sba-loans/personal-loans-tips-and-guidelines-for-the-borrower

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