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Things
to think about before you apply for loans |
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- Each time you apply you leave a 'footprint' with the credit rating agencies
- if you apply to many times without taking loans you can significantly reduce
your credit score. More on credit.
- You will be signing up to a repayment schedule. In other words as part of
the deal you will be agreeing to pay a certain amount on a given date each month.
The security you offer is at risk if you do not keep up payments. Ultimately,
this means that you could lose your home or some of the equity you have on the
home.
- You do not have to opt for a secured loan although if you go for an unsecured
loan, on default of repayment lenders can apply to the courts to make a charge
on your property - so there is still a risk to your property. Secured loans usually
come with lower interst payments.
- Understand your outgoings - a loan can be very useful but only if you are
confident that your lifestyle will leave you with enough spare cash to make your
repayments.
- Make sure you understand the true cost of your loan. Although regulation
serves to ensure clear accurate information, it is up to you to make the most
of the information provided. The main thing you need to understand about your
loan is the cost - this means understanding the APR (the true cost of your loan).
- Think about protecting your loan repayment with some kind of income protection
insurance. You will often be offered this with your loan application but you are
free to shop around for insurance.
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