There are so many different types of loans and they differ in lots of ways, so it is tricky to say whether one type might be better than another without making all sorts of comparisons. There are certain things that you will find are more important though, when you are comparing loans and these are very often to do with the cost and interest rate. However, one thing that is equally important and can often be overlooked is the repayment.
Repaying the loan is really important because if you miss the repayment you will end up having to pay an extra charge or fee as well as having to pay the interest for longer. This means that the loan will be more expensive than you anticipated and it will also last longer. This could be stressful for you and this will not be nice. However, it can be avoided as you can make repayments easier.
Choose the Cheapest Lender
It is a good idea to start by comparing the different lenders to see how the price of them varies. You will find that there can be quite a difference, but you do need to be careful how you are comparing them. You need to make sure that you are comparing them like for like. For example, it can be tempting to just compare the interest rates and pick the lender with the lowest one. However, some lenders will also have fees and you need to allow for those as well when you are calculating the costs. Therefore, make sure that you know exactly how much you will need to repay in monetary terms and then you will be able to properly compare them.
Borrow a Sensible Amount of Money
If you borrow too much money, then it will be difficult to repay it. This is because you will be repaying for longer and repaying larger amounts of money. Therefore, make sure that you are borrowing a reasonable amount. Also think about what you need the money for and make sure you are only borrowing what you need. If you have some savings or other spare money use some of that towards it and then you will not have to borrow so much. It is often tempting to borrow a bit extra so that you have some spare money to treat yourself to some fun things. However nice this seems, you need to think about the fact that you need to repay it and pay for the loan so it is best to avoid doing this if you can.
Choose a Manageable Repayment Amount/Term
You should give some thought to the repayment amount and term. Look at the loan conditions and should tell you how much you will need to repay and how often. You need to make sure that you pick something that you will be able to manage. For example, if you have to repay for six months, that will mean that each payment will be less and therefore easier to manage. However, if you have an expensive car service due in four months time, you may want the loan to be repaid by then so that you do not have to worry about the cost of it.
Ensure You Can Afford Repayments
It is good to look at how much you will be expected to repay each month and make sure that you will be able to afford it. You will need to be sure that you will have enough money to cover that repayment as well as to pay for the other things that you need to pay for as well. This will include things like other loan repayments, rent, insurance, utilities and food.
Generate More Money
If you feel that you will not be able to afford the repayments or that you will struggle, then it is wise to have some plans as to how you can generate more money. You can do this by selling things you own and no longer need, working more hours, doing some online work, buying less things or paying less for what you do buy. A combination of these things can really help.
As you can see, it can be useful to have a loan that you repay in instalments as it can make it easier to manage all of the repayments. This could mean that it will be better to use an instalment loan compared with a payday loan which has to be repaid in a lump sum. However, you need to think about your own personal circumstances and think about whether that will suit you the best. Consider your personal financial situation, what you can afford and what you can afford to repay and for how long and this should help you to make the right decision for you.