Personal Loan Tips

Are you considering a Personal Loan?

Check out our top 10 personal loan tips to ensure you get the best personal loan.

Taking out a personal loan is a big deal, but knowing what to look for and shopping around for the best personal loan deal could save you hundreds if not thousands of dollars. National Finance Choice present you with our top 10 tips for choosing the right personal loan in Adelaide for your circumstances.

Before you take out any personal loan, you should always read the small print carefully and ask your NFC finance broker if you are unsure of the options available to you.

1. Check your credit report before you apply

   Not only will checking your credit report reveal to you how you look to prospective lenders, it also gives you the opportunity to correct any information that is wrong and give yourself the best chance of being approved. You can get a copy of your credit file and a comprehensive credit file report detailing how you can fix any credit problems at http://www.mycreditfilereport.com.au.

2. Make a budget and stick to it

   If you are planning to take out a personal loan, it’s crucial that you make a budget and stick to it. You need to work out carefully how much you can afford to borrow without stretching your finances and ensure that you will be able to meet your monthly repayments.

3. Don’t borrow more than you need

   While it may be tempting to add a little extra to the personal loan amount to treat yourself, don’t do it. Borrowing more will cost you even more in interest in the long run, and you’ll likely be in debt for longer, so only borrow what’s necessary and resist spending more of tomorrow’s money today.

4. Know the lenders APR

   Before you can find out what the APR will be on a loan, you need to make an application with the lender first. Every personal loan is assessed on it’s risk factor to the lender, and is calculated by using the 6 ‘C’ of credit assessment, as documented by Nigel Brookson.
   This is the basis of the lending criteria for loans every lender uses.
   APR stands for annual percentage rate. It tells you how much a loan will cost you in interest per calendar year and it allows you to compare loans against each other. Lenders are required by law to publish the ‘comparison rate’, and to be considered the “typical APR”, it must be the rate offered to at least two-thirds of the loan applicants that get approved for that loan. Also before you sign up for a personal loan, make sure you know exactly what the repayments are per month.

5. Watch out for deferred payment offers

   Some lenders, and even car dealers on used cars in Adelaide may offer to defer your repayments for a few months at the start of the personal loan. However, you will still be being charged during this time and your future repayments will be larger to compensate. Your total amount repayable will be larger too, so avoid this if possible.

6. Check for early repayment charges

   If you think there is a chance you might be able to pay off your loan early, you need to check the early repayment charges that the Lender charges, when accepting a personal loan.

7. Ask about LPI

   Loan protection insurance (LPI) is being taken out by more people these days to protect themselves financially if something goes wrong. It only adds a relatively small amount to your repayments to be covered in the event of job loss, accident or injury. NFC SA have many loan protection insurance options for you to choose from.

8. Don’t make too many enquiries

   When you apply for a personal loan online, you can often get an instant decision, but don’t be tempted to apply for several in the same week. A record of each application you make is left on your credit report, which lenders check before approving a personal loan. Having lots of applications on your record makes you look desperate and less likely to be approved.

9. Know the risks of secured loans

   If you have a less than perfect credit rating; perhaps some credit defaults, you are more likely to be approved for a secured personal loan than an unsecured loan because lenders see them as less risky. However, there’s a lot at stake when you enter into a secured loan agreement, and if you don’t keep up with repayments you risk losing the item being financed, so don’t sign up unless you’re 100% sure that you will be able to meet your repayments; and this is another good reason to strongly consider loan protection insurance.
   Bad credit car loans in Adelaide are there for people who are aware they have a bad credit history, and are looking for a second chance car loan.

10. Be careful with personal car loans

    While “balloon payment” car loan schemes on used cars in Adelaide can be appealing; which is where you defer part of the payment till the end of the loan (like a deposit in reverse) thus reducing the personal loan amount and the monthly payments, you have to pay this final amount before the car is yours. Be realistic about whether or not you will be able to afford the final payment, if not you could end up with a personal loan for far longer than you wanted.