Loans - Don't Rush in

September 13th, 2009

You know what it's like; you find something you've wanted for a while ' such as a new car or a home improvement ' but your current financial situation means you can't afford it at this point in time.


In this case you have one of two options: hold fast for now and accumulate some savings in order to afford said item, or you could borrow the money in order to make a quick purchase. There are a variety of different types of loan available, offering varying levels of security, payment options and durations:



  • Secured Loans ' involves securing an asset against the policy ' such as a car or property ' as collateral.

  • Unsecured loans ' monetary loans with no collateral, which are usually sold through financial institutions under a range of different packages ' such as personal loans and corporate bonds.

  • Payday Loans ' short-term loans that offer a safety net til payday (hence the name) but usually with a high rate of interest


Loans can be useful for affording essential purchases, but it can also be a risky business if you don't play your cards right. Here are a few handy hints to bear in mind before you commit to a loan deal:



  • Consider your current situation and whether you are financially healthy. If you have a lot of financial commitments already, the addition of a loan to your portfolio could have implications in future.

  • Draw up a financial plan ' including monthly outgoings and your current spending situation ' and make a list of financial milestones to stick to, cutting down on non-essentials and reducing your current spending levels in order to keep your finances healthy, thus increasing your chances of having a loan approved.

  • It can be worth researching your credit record before committing to unsecured loan deals. As you are not securing the loan against a particular asset, these can be risky if you're unable to afford repayments.


By ensuring that you give yourself a thorough financial health check beforehand, and keep up with the repayments, you can make the most of your loan plan whilst also helping to keep your credit score in a healthy state.

Author: David Collins
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