Welcome to Loans 4

An internet search will reveal that there are lots of loans available from all sorts of providers. Lending is no longer the preserve of the UK banks and building societies, with supermarkets and other organisations in on the act as well as a multitude of foreign businesses. As a result, it's a very competitive business, which at times might have some attractive rates on offer.

Although the interest rate charged is given as the headline figure, you need to look a little deeper before committing yourself to a loan. Lenders have a habit of quoting 'from' rates that never seem to be actually available. Some lenders will have a set-up fee and possibly a termination charge that add to the overall cost of the loan. You really need to add up all your payments over the full term of the loan to calculate the full cost. This enables you to compare the various offerings properly in order to work out which is the best value.

If there's a chance you may be able to pay the loan off early, you also need to check for early termination penalties. These can be quite steep and take away most of the benefits of clearing the debt before the scheduled term.

Whether you actually qualify for an unsecured loan may depend on your credit history. If you have a bad record, companies may be reluctant to lend without security and so a secured loan may be the only option. You need to weigh up the overall cost against the risk of losing your home or whatever else you put up as security. There are companies that will provide unsecured loans to people with a poor credit history but interest rates will be higher.

In case of short term emergencies, pay day loans are available. These are small value loans that are designed to see you through to the next pay cheque. They tend to have high rates of interest, although this may not be a problem if you repay the loan quickly. However, you need to be sure of your commitments before taking on a pay day loan.