Things you need to compare when looking for the most suitable loan

It has always been important to be cautious and vigilant when looking for the right loan for your needs, but in the current financial climate, where borrowing costs are often rising, credit conditions have become tighter, and the choice of loans has been reduced, it is particularly important to keep an eye out in order to get the best deal.

Whilst the choice of loans available has reduced since the onset of the global credit crunch last summer, there are still many different types of loans and many different lenders that offer these loans, so you do need to put in a little work in order to make sure that you end up with the right deal for your needs.

It can be difficult to find the right loan, particularly when you don’t have a huge amount of time to look – and with the pressured of work and family to keep us busy most of us cannot commit too much time to ringing around or trudging from one lender to another to find out about a loan.

This is where the Internet can prove invaluable, as it will allow you to browse and compare loans at any time of the day or night to suit you, and will also allow you to make your application online. You can take your time over completing your application, and there is no pushy sales person to worry about. Many reputable lenders operate online, so you will enjoy plenty of choice, as well as speed and convenience when you go online for your loan.

It is important to remember that there are some keys areas in which you need to make comparisons before you commit to a loan product. You should never jump in feet first with an important financial commitment such as this, otherwise you could end up paying way over the odds.

Always do your research, and always compare different deals from a range of lenders in order to optimise your chances of getting the best deal and the most affordable loan for your needs.

• Always check the interest rate that is charged on the loan. This is a key area, as this will affect your monthly repayments as well as the amount that you pay overall on your borrowing. Whether you go for a secured or an unsecured loan the interest rate charges can vary from loan to loan as well as from one lender to another. A number of factors can also affect the interest rate that you get, such as the amount that you borrow, your credit and financial status, and your personal circumstances.

• Compare the repayment periods on offer. 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. 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.

• Check whether there are any set up fees. You will not usually be charged any set up or arrangement fees for an unsecured loan, but you may be for a secured one. Always make sure that you are aware of what the fees are so that you do not get any nasty surprises once you commit to the loan. Also check on other fees that may be charged, such as early redemption fees or penalty fees for late or missed repayments.

• Find out what the borrowing levels are before you apply. There is little point going to the trouble of completing an application form for an amount of money that the lender does not offer. For example, most unsecured lenders offer up to £25,000 subject to status, whereas most secured lenders offer from £3000 upwards subject to status. Find out what the borrowing brackets are before you make your application to save wasting your time.

• 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.

• Check the eligibility criteria. Again, there is little point in applying for a loan if the you unlikely to be eligible with that particular lender or for that type of loan, and a refusal could have a negative impact on your credit making it more difficult and more expensive to get future credit.