| |
Major Site Upgrade in Progress |
 |
|
 |
|
Shahla
Money Managing Guru
Joined: 13 Nov 2004
Posts: 3324
Cash Points ££ 126163.28
|
|
|
 |
|
 |
|
 Posted: Fri Jan 18, 2008 3:34 am Post subject: Choosing the Wrong Personal Loan Could Prove Costly |
 |
|
|
 |
|
 |
|
|
|
|
By: MoneyFacts
If your new year’s resolution is the tackle your debt by consolidation, tread carefully as you could be caught out by high interest rates and over priced insurance. Lisa Taylor, analyst at Moneyfacts.co.uk investigates:
“Consolidating your debts onto one loan can prove an ideal solution. It could cut your monthly payments and see your interest bill lower. Also for those less disciplined, the fixed monthly repayment might offer the structure you need to commit to repay the debt within a given time.
“Firstly you need to decide if a loan is the best option for your situation. Of course 0% credit cards are the most competitive method to borrow, but this can be dangerous unless you are strong willed enough to stick to a fixed monthly payment and not to continue using your plastic. This method may also only be suitable for smaller amounts of borrowing, typically less than £5K and currently is only available up to a maximum term of 15 months.
“If your budget shows that you need longer than 12-15 months to repay the debt, a low rate balance transfer deal may offer a better solution. First Direct for example offers a 4.9% deal for five years, while Citi has a Life of Balance MasterCard with a 5.8% rate until the balance is repaid. These rates are substantially lower than any personal loan rate currently on the market.
“The credit crunch has caused the personal loan market to tighten, lenders have withdrawn from the market and rates have seen a continuous increase throughout 2007. Don’t be fooled into thinking that your existing bank or building society will always give you the best deal, just because you have a relationship with them. With detailed computerised credit scoring systems used these days, loyalty makes little difference. The difference between the best and worst interest rates can be almost double, so choosing the wrong loan provider can be a costly mistake.
“The tables below show just how different the cost of the same loan varies:
Source: Moneyfacts.co.uk
“While interest rates should be relatively easy to compare and evaluate if you are getting a good deal, there is the added complication of typical and personal priced loans. In fact 89% of loans are priced on a typical rate, meaning that 66% of accepted applicants will receive the advertised rates, while the remaining 33% of applicants could be offered a higher or lower rate depending on their individual credit rating.
“But the biggest area to be aware of in the loans market is the insurance you may be offered. The payment protection insurance (PPI) generally provides cover against accident, sickness and unemployment but could also include features such as hospitalisation benefit and even critical illness cover.
“The difference in the most competitive and most expensive cover can add an additional £1760.40 to a £5K loan over three years or as much as £4157.40 to a £25K loan over five years.
“By shopping with an independent provider such as paymentcare.co.uk, the cost of PPI could be slashed dramatically to £316.80* for a £5K loan over three years and £1,650* for a loan of £25K over five years.
“Remember, a personal loan is usually a large long term fixed financial commitment, so don’t blindly plump for the first deal you see. Make sure you know you are getting a competitive rate. If you are taking the PPI, consider the option of an independent provider, make sure you know the level of cover you are getting and read the exclusions and terms and conditions carefully.
“Getting the best deal will mean your monthly repayment will be cheaper and you can escape from your debt burden much earlier.”
*£5.50 per £100 LASU
www.moneyfacts.co.uk - The Money Search Engine |
|
|
|
|
|
|
 |
Online Finance Tools & Calculators |
 |
| Credit Score Calculator |
Easy to use online Credit Scoring tool - Calculate your credit score now online for FREE ! using the Moneyforums.co.uk credit scoring tool. Also TEN Tips on improving and mainting a good credit rating ! |
|
| Quick Health Calculator |
Easy to use quick health calculator to help you get started on the path to fitness. Calculates your body mass index (BMI). |
|
| "When will I die ?" Calculator |
Calculate when will you die based on your current life style and then more importantly what you can do about extending your lifespan ! |
|
| Mortgage Calculator |
Easy to use online Mortgage calculator tool - Calculate how long it will take to pay off your mortgage and what your monthly repayments will be as well as interest charged per month per each year. |
|
| Savings Calculator |
Use the flexible savings calculator to estimate the amount of interest you would earn given a level of monthly savings, with many optional settings. |
|
| UK Tax Calculator |
Check your tax and NI liability using this easy to use online tool. Outputs, Tax, Ni, Net pay and gross pay on an annual, monthly and weekly basis, also estimates your tax burden and the number of days a year you work for the tax man ! Plus lots of tax saving tips. |
|
|
 |
|
 |
|
Money
Forums Guides |
|
| Credit
Card Stoozing |
The
following guide explains the basics of credit
card stoozing in a step by step basis. |
|
| Discount
Vouchers |
Online
discount vouchers giving upto
50% off in stores such as Dixons,
Tesco, Avon, Currys, Boden and more. Many
of the vouchers are time limited - So check
back regularly |
|
| Money
Saving Guide |
Guide
to saving money on household bills & personal
finances - Start saving thousands of £'s
every year TODAY ! |
|
| Savings
Tree |
A
guide to Savings Accounts, from Cash ISA's to
Regular Savers to Premium Bonds, all explained
in an easy to understand manner. |
|
|
Users
Groups | Profile
| Messages
| FAQ | Sponsers
& Links | Member
list | Recommend this site | Top Money Saving Sitee
© 2004 - 2007 Moneyforums.co.uk / Market Oracle Ltd - Asserts copyright on all topics & posts made on this site. Moneyforums are open forums, and thus posts are NOT endorsed by Moneyforums.co.uk / Market Oracle Ltd . Any and all information provided within the Website is for general information purposes only and nor is or shall be deemed to constitute, financial or other advice. We recommend that independent professional advice is obtained before you purchase any product and/or service. All tools and guides are provided as is for general information purposes only.
|
|
|
