If you are choosing a loan, it can be really tricky to know whether a certain type of loan will work for you. You may wonder who they are for, who they suit the best and whether they will be right for you. There are different reasons why they may be good or bad and so it is a good idea to have a good think about whether they will suit you. Think about what you are looking for in a loan and lender and then you will be in a better position to know whether the loan will suit you.
You might want to therefore ask yourself a selection of questions and these will help you to know whether the loan will be right for you.
- How much money do I need? – an instalment lender will tend to lend you between £100 and £1000. This means that if you need more money than this, then they will not be the right choice for you. You also need to be aware that if you are first time borrower then a lender may not let you have a large amount of money to start with. They may want you to borrow a smaller amount and show that you are capable of repaying that before they lend you more. Therefore, if you need more than a few hundred pounds you may need to contact some lenders to see whether they will be happy to lend it to you. If you cannot find a lender willing to give you as much as you need, then an instalment loan will not be a suitable choice.
- How much can I afford to repay?– it is well worth looking back at your previous bank statements to find out how much you would normally be able to afford to repay. It might be that you normally have a bit of money left at the end of each month and you will be able to use that to make the repayment. However, this may not be enough or you may find that you do not have any left. This does not mean that you have to give up though. At this point you will need to check and see whether you can get more money in any way. This might seem pretty hard but it need not be. If you have a look at the things that you normally buy, you may find that you will be able to get some of them cheaper or you may even be able to not buy them at all. You may also be able to think of ways that you could generate a bit more money, perhaps doing some more work, taking on an extra job, doing online work or even selling things that you own.
- How much am I prepared to pay? – You will need to think about the amount that you are happy to pay for the loan. All loans cost money and you need to decide how much money you will be happy paying for the loan. It may be that you will not think you mind, but if the loan cost a million pounds you would be unlikely to take it out! So, just check how much it costs and think about whether you feel that is a fair amount. You may want to compare that price with other lenders or other types of loan and then you will get a better idea as to whether you feel that it is a good price or not.
- Do I like the lender? – for some people the lender is not important, but others might feel that they want the lender to have particular features. It could be that they want a lender that they have heard of, that comes recommended or things like that. There are all sorts of possibilities and it is a good idea to have a quick think about what might be important to you. Even if they are not that important, it could be a good idea to have a think because if find that two lenders are really similar in cost and repayment amount then this could be a way to choose between them.
So, you can see that it takes a bit of time to think through whether the loans will work for you. Whether they will suit you will depend on your specific circumstances. You may find that at one point in time they will be the best possible loan but on another occasion they will not. Therefore, you will need to assess them in light of your current situation and your current lending needs. It is also important to compare the lenders within each loan type as they will vary and some will suit your needs better than others.