Everything You Need to Know About Using Personal Loans

The increasing number of loans and financing options available on the market is a clear sign that the market is growing. More people use loans for various purposes, so it is only natural that lenders start to offer more – and better – deals as a way to respond to the growing demand.

When used properly, certain financing options are handy personal financial instruments to have. There are a lot you can do with a good personal loan. You can even use personal loans for productive purposes such as starting your own business.

That phrase, “when used properly,” is actually the important part. In the right hands, loans are great for leveraging your personal financial ability and taking it to the next level. Before you get started, here are everything you need to know about using personal loans.

Term of the Loan

Not all personal loans are created equal. Some of them are designed for long-term use. They allow you to extend the loan to up to 5 years – or even more, in some cases – and leave you with a manageable monthly repayment amount. Other personal loans are more for short-term use.

Understanding the nature of the loan according to its term is important. This will affect how you compare personal loans and how to benefit from them the most. A loan designed for short-term use will have a higher APR, but that’s because you are not supposed to utilize the loan for a full year.

Choosing the right term for your next personal loan is also important from personal financial management standpoint. You want to make sure that the monthly repayment amount is affordable, but you don’t want to extend the loan too much that it becomes expensive to use.

The Cost Structure

Speaking of personal loans becoming expensive to use, it is also important to fully understand the cost of using the loan. You can start by reviewing the interest rate of the loan, since this is the most straightforward cost element to review.

The Annual Percentage Rate or APR depicts the cost of using the loan in a more objective way. It takes into account other fees and charges associated with the loan. The APR is usually higher than the base interest rate of a loan for this reason.

There are also other fees and cost elements to consider. The origination or establishing fee is an important cost element because it affects the overall cost of the loan substantially. Underwriting fee, appraisal fee, and processing fee are also worth considering.

The Payment Structure

For maximum flexibility, you want a personal loan that you can repay in a comfortable way. This means getting a monthly repayment amount you can actually afford while limiting the fees associated with the loan. Remember that personal loans – or rather missing a payment for a personal loan – affects your credit history substantially.

You also want to check if there are prepayment charges that come with the loan. This is the fee you have to pay when you want to settle the loan early. Consult the lender about how you can repay the loan early and if it is possible to pay more than the predetermined monthly amount to repay the loan faster.

Usage Tips

Comparing personal loans before deciding to apply for one is a must. By comparing deals from multiple lenders, you can settle for the most affordable personal loan on the market. You also have more freedom to determine the repayment structure and other details about the loan. Mention that you are comparing deals from multiple lenders and you may even land an extra discount or two on your interest.

That said, finding the right loan is only the beginning. To fully benefit from using a personal loan, you also have to keep these tips in mind:

  • Borrow only the amount you need, not the amount you want. Some personal loans offer higher credit limit. While you can take out more than £50,000 in personal loan for different reasons, you should not always apply for the maximum amount if you only need a small loan for a short period of time.
  • Control how you use the loan and make sure repaying the loan does not affect your monthly budget. This means keeping all loan repayments below 30% of your income in an ideal situation. If you are spending more than half of what you make to repay loans and bills, you are looking at a potential financial issue and you need to start taking steps to improve.
  • Work with a reputable lender. This is another must-do if you want to benefit more from the personal loan. Great lenders work with you, even when you run into issues trying to repay the loan.

Now that you know these essentials, making the most out of the available personal loans becomes easier. The next time you need to finance a big purchase or a gap in your budget, you can turn to personal loans for help.

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How to Save Money on Car Expenses

Buying a car, new or used, is only the beginning. Yes, you can do a lot to save on the total cost of owning the car. Taking steps to find the most affordable car loan to use and negotiating a better deal with the dealership can help lower the cost of buying the car by a substantial margin.

However, you also have other car expenses to think about, especially once you start using the car on a regular basis. Getting car insurance, the cost of petrol, and other expenses associated with using the car add up to a substantial amount every month if you are not careful.

Worry not, because there are many things you can do to save on car expenses as well. To help you get started, we are going to review some of the best tips you can use in this article.

Regular Service…

There is a big misconception about car service on the market. Many believe that regular service is not a necessity and that you can save more by skipping a few of those service dates. This is certainly not the way to go if you want to keep the cost of running the car at minimum.

For starters, some car manufacturers require you to keep up with your regular service to maintain the warranty of the car. This means skipping one or two service dates actually voids that warranty, resulting in more expenses when something does go wrong.

On top of that, regular service is a great way to avoid bigger problems in the first place. Rather than waiting for something to go wrong – and dealing with a large repair bill – it is much better to keep the car well-maintained. That brings us to our second tip, which is….

…and Regular Tune-Ups

Aside from essential maintenance tasks such as changing the engine oil and spark plugs, regular service of a car also includes general maintenance such as tuning up the engine. This is a way to save money on its own and there is a good reason for that.

A badly tuned engine consumes up to 35% more petrol than an efficient one. Over time, you are actually wasting a lot of money on petrol when the engine is not maintained properly. With the price of petrol going up at its present rate, this is a moneysaving tip you don’t want to miss.

Check Your Tyres

There are a lot of consumables in a car, and the tyre is one of them. Tyres wear out over time and you will have to replace them eventually. Before it is time to replace your tyres, however, there are a few things you can do to save.

First, make sure you go for the steel-belted radial tyres for extra durability. These tyres last up to 20% longer than regular tyres, which means you also save more in the long run. Considering that steel-belted radial tyres are equally affordable, there is no reason not to get them.

You should also rotate your tyres regularly. Tyres wear out at different rates depending on how the car is used, which is why rotating your tyres is a good idea. You can get the tyres to wear out more evenly and go longer with a set without any added danger.

One last thing to do is making sure that the tyre pressure is set just right. You get to reach that optimum mile-per-gallon ratio when the tyres are pumped to the right pressure. At the same time, you also avoid wearing one side of the tyres excessively.

Get Your Insurance Set

Saving on car insurance is the next thing you can do. Once again, the goal is to save in the long run, and the way to get started is by increasing your out-of-pocket expenses by a small margin. Raising your deductible by £100 could result in a 10% to 20% drop in insurance premium.

Maintain a clean driving history to save more. It is not uncommon for insurance premium to drop further when you only have little to no claim in your record. As the premium gets lowered every year, you can expect the money you save on it to grow as well.

It is also a good idea to compare insurance deals before deciding to buy the policy that suits you. Similar to finding a car or personal loan to use, mention that you are comparing insurance deals to get additional discounts and deals thrown in.

Last but certainly not least, check if the insurance company you use offer car insurance too. Buying multiple insurance policies from the same company will result in more savings on all of the insurance coverage you buy.

All of these tips are easy to implement, and they allow you to save money on car expenses easily. if you still want to save more on your car-related expenses, stay tuned for more tips right here on this site.

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