Getting a secured loan need not always be expensive. Here are some tips to apply when getting a secured loan.
Assess How Much to Borrow
Before you get started, you must list down all your existing debts first. Draw a line where the secured loan rate fits in, and then only consider the loan to pay off those expensive debts above the line.
Do not borrow more than what you need. Never take advantage of the extra amount you’re allowed to borrow for some personal gratification.
Do not feel pressured to consolidate all your debts into one loan, because you’ll tend to repay a higher interest rate for a much longer time for all of them.
Convert Your Debts from Fixed Rate into Variable Rate
Unlike most unsecured loans, secured loans interest rates usually vary in accordance with UK’s base rates and the lender’s own terms. However, if you’re thinking about converting your fixed rate debt into a variable one, always ask yourself if you can afford the repayments if the interest rate suddenly goes up. Also, be sure to check if there’s a penalty for paying off the loan early.
Decide How Long to Borrow for
Be sure to work out a budget and come up with a realistic amount that you can stick to in the long run. Underestimating can take you longer to repay which could cost more in interest, and overestimating might put your property in danger.
When shopping around, it’s important to make sure that the lender shoulders all the costs and should already be included in the loan APR, except for the Payment Protection Insurance. PPI serves to cover the repayments for a limited time in the event of sickness, accident, or unemployment. If you want a PPI for your deal, be sure to compare prices based on the total cost and not the APR.