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Plan your Loans Year

Any important decision will benefit from good forward planning and the decision about which loan to pick is one of those choices. Loans are offered from so many sources these days, it takes time to find and understand the options being provided. Just choosing a cheaper loan over a more expensive alternative could save you hundreds of pounds over the lifetime of the loan.

Let's start with a few loans basics. How much do you need to borrow and do you really need all that money? Also when do you need the loan and how quickly can you repay the it?

The factors that make loans costly are usually expensive rates of interest, high add-on charges and repaying the loan too slowly. Things can get even worse if you fail to keep up your loan repayments, so setting realistic repayment levels is very important. Too many people fail to calculate what they'll be able to afford and leave things to chance as far as affordability is concerned.

Another important consideration is your personal credit record or history of making credit repayments. If you have shown yourself to be a good repayer of debt, you are more likely to be offered the loan you want and you'll also benefit from potentially lower rates of interest, because lenders will view you as a safer bet (or lower risk).

It may even be worth delaying your loan application for a few months if possible, while you build up a good credit record, particularly if yours is poor or you have very little history of taking credit. Just making regular ontime repayments on your creit card for a few months can help. You may also want to try and clear any credit card debts before you get into repaying a new loan. Those credit card balances are almost certainly going to be more expensive than your new loan and repaying them before your new loan starts will be much easier.

Another way of keeping things under control is to reduce the size of the loan you take. If you are using the loan to buy a car, consider opting for a cheaper model - perhaps the next level down or an older car if buying second hand. You could also try to raise some cash yourself, by selling off any unwanted possessions before you take your loan. Give yourself a cash target to raise before you sign-up for your loan. Not only will you need a smaller loan but you'll feel that you deserve your new treat more when it finally arrives.

So plan well ahead for your next loan. Do your research and understand the loan options available. Work hard to give yourself the best possible chance of getting a cheap deal and save yourself lots of money over the next few years.

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