Borrowers should thoroughly understand their financial position in order to find the most affordable personal loan for them, according to Yahoo!7.
Why get a personal loan?
Personal loans can be used to consolidate a range of high interest debts into one simple, more affordable monthly payment. Credit cards currently charge between 10-23% interest and a consolidation loan can bring this down significantly. Personal loans can also be used to catch up on bills and pay for personal assets such as cars and household appliances.
The difference between secured and unsecured personal loans
Secured loans are backed by an asset that can be claimed if the loan is not repaid. Unsecured loans are not backed by collateral and so attract a higher rate of interest.
The difference between fixed and variable rate loans
Variable rate loans have fluctuating interest rates, ranging between 9-18%. However, they also offer more flexibility for borrowers who wish to make additional repayments.
Fixed rate loans give borrowers the certainty of a known repayment amount for a period of time but are less flexible for those who wish to make early repayments or other changes.