Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Choosing the Wrong Personal Loan Could Prove Costly

Personal_Finance / Debt & Loans Jan 09, 2008 - 04:10 AM GMT

By: MoneyFacts

Personal_Finance 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


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in