5 Great Tips for Getting a Personal Loan

Whether you need to buy a new car or an expensive home appliance you can always opt for personal loans in case you are not in a financial condition to pay for the item all at once. However, there are not so many cheap personal loans out there. Be prepared to pay at least 6-7 percent extra cash every year apart from the loan installments.

This 6-7 percent of the cash you would need to pay is called rate of interest cash. Also, the rate of interest depends on your credit record and related history and thus the rate could be even higher if your financial management history is not good enough. For your help, here are some great tips for getting a personal loan-

1) Choose the amount wisely

Even though obtaining a huge sum of money on the fly sounds pretty exciting, the reality is far different. You now have the idea of how much cash you would have to pay when you get a loan and so you would want to take a loan of least amount possible. Many people make the mistake of obtaining large loans and end up repaying for years.

2) Keep the duration less

Apart from the amount of the loan you have taken there is one other factor which decides how much extra cash you would have to pay to repay the loan. It is the duration for which you would be paying back the loan. For example, if you would pay off the loan in installments for 4 years it would cost you much more than paying off in 2 years. This is because the rate of interest is the same and the more you will make the installments, the more cash you would pay.

3) Think twice before opting for variable rate of interest loan

Those personal loans whose rates of interests are variable are better to be avoided. What happens is that a customer is enticed by the fact that the rate could fall in the coming years and then he would have to pay less. However, you are likely to have less rate of interest in the future as since last 10 years it has been only high.

4) Your house is not safe

Previously the personal loans were vividly called as insecure loans when compared to other loans. With time the clever loan providers changed the term to personal loans while the nature of these remained the same. By unsecured it means in case you fail to make any installments and crossed the threshold time duration allowed for you, you are bound to lose your home permanently or until you pay off the required installment.

5) Stay away from payment holidays

“Payment Holidays”, is the term the banks use to camouflage the big loophole behind it. According to them, within these “Payment holidays”(as what they like to call it) you can wait for a few months before you actually begin repaying of the loan once you have got it. The reality is that even if you opt for these payment holidays, as how enticing the term sounds, your interest meter would be still running. This means even though you don’t have to pay any installment during this period, you would have to pay the interest rate as per the amount of loan taken later.

For example, if you took a loan of $10,000 and the interest rate is 7 percent then for a two month “payment holidays” you would have to pay somewhere around $140-$150 as by the interest rate. To save this money you must decline opting for the payment holidays at any cost unless it is mandatory.

Author Bio: This article is written by David Kendall. He contributed this guest post on behalf of EllinasFinance.com – check the website to know more about Cyprus Loan. David is a freelance finance writer and his articles appear on various finance blogs.