A personal loan is a lump sum of money borrowed from your bank, credit union or online provider that you pay back in fixed monthly payments. The lender who grants you a loan will use your credit score to determine what interest rate your loan should be charged at.
Choosing the right type of loan (e.g. term loan, RCP, revolving loan, and an overdraft) along with choosing your credit provider, can lead to a better financial future when planning your finances.
The type of loan depends on the amount you want to borrow and your financial needs.Getting a loan costs money, so it’s important to shop around and do enough research to compare costs and see which type of loan is best for you and your budget.
Every time you apply for a new loan, your credit record is updated with the credit bureau- Credit providers and financial institutions use this information to determine whether you can manage additional debt.
You will be given a credit limit (This is the total amount you have available to use) based on your affordability and credit history. You will be charged interest on the outstanding amount so make sure you check the interest rate offered by each credit provider you approach.
Your repayment is fixed and is based on the limit taken up and must be repaid via debit order. You will receive a loan statement dependent on who your credit provider is for you to keep track of your loan repayments.
Some tips to help you choose the right credit provider:
When taking up a loan, it is important to get quotes from different credit providers to compare interest rates and charges.
Ask your credit provider about credit life insurance to assist with unforeseen circumstances.
Credit providers can make payment arrangements to assist you during financial difficulties.
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