Money Saving Tips for Loans

TIP 1: SECURED vs. PERSONAL LOANS

There are two broad types of loan on offer: Secured loans which will allow you to put up your property, usually a house or car, as collateral and Personal loans which don’t.

A secured loan usually offers a better rate, a higher amount to borrow and a longer period of repayment but they should really be viewed as a last resort. The collateral you put up for a secured loan is usually your home and failing to make repayments can end in you losing it. Don’t risk your home unless you absolutely have to.

The best way to save money on a loan is to borrow as little as possible. Work out your budget, decide how much you’ll need and stick to it. This way you should be paying back the least amount of interest possible.

You should also be weary of quick delivery fees on any loan, some lenders will charge you for the early delivery of any money as a standard.  

Keep the term of your loan as short as possible to cut down on the interest, but remember not to make it so short you’ll have trouble repaying it.

Try to find a fixed rate loan, if a variable rate is your only option be prepared that you may have to repay more later.

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TIP 2: FLAT RATES

Always judge a loan by its APR, which is the amount you will have to repay. Many lenders, especially for car loans, will advertise its flat rate. A flat rate appears to be much lower than the standard APR but in truth it is usually two times it. Save yourself money from the start by taking out a loan based on its APR.

TIP 3: FLEXIBILITY

Watch out for any penalties your loan may come with. Overpaying on a loan to pay it off early can have penalties that make it unprofitable. Likewise, your card could have penalties for underpayments.

Being aware of these penalties and finding a lender without them can make you massive savings in the long run.

Choose a flexible loan if you can as you should aim to clear your debt as soon as possible.

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