No matter how well you budget, you can often be left high and dry when unexpected expenses crop up. Maybe a household appliance breaks down, or you need to make an emergency trip to the vet. Perhaps your laptop was stolen and you’d forgotten to renew your insurance. Incidents like these can blow through any savings you might have quicker than I blow through my Christmas dinner, and can leave you struggling to make ends meet.
A loan might seem like the best option in these circumstances, but many people are wary of loan rates – and rightly so. It’s worthwhile exploring all your other available options when you’ve blown through your budget. However, if no other options are available for you then be committed to staying calm and putting the time into and research into ensuring you choose a loan with the most reasonable repayment plan that you can manage.
The most affordable loan type is typically a personal loan. They’re usually ‘unsecured’, which means it is not backed by any collateral. However, this also means such loans are a bigger risk for the lender, consequently coming with higher credit requirements and interest rates.
The good news is you can use a personal loan for almost anything. You can even use them to consolidate your existing debt as part of a management program to reduce your overall monthly payments if you have multiple outstanding debts. Due to this, personal loans are a great way of building credit and increasing your credit score.
With higher credit requirements and interest rates, personal loans may not sound like the most affordable option. However, some lenders offer special interest rates to new customers, while existing customers can often take advantage of better interest rates once they’ve proven their reliability.
Most lenders operate using an online application process, making it easier than ever to get the cash you need.
Do affordable loans really exist?
The most important step in securing your loan is choosing a repayment plan that works best for you and your budget. Make sure you can choose to settle your loan early if you want, so you can save more on interest and fees. Flexible borrowing and repayment options are crucial. However be aware that some lenders will charge early repayment fees, even if you just pay back more than the minimum amount every month, so make sure you really are getting the conditions you want in the fine print.
A final tip
Once you’ve chosen your loan, make sure you factor your repayment cost into your monthly budget. Failure to do so could soon turn into a costly credit nightmare. However, with careful planning, you can repay quickly and as painlessly as possible, while potentially improving your credit at the same time.
Finally, don’t borrow too much. Small loans accrue less interest as you pay them back faster. Limit your borrowing to what you need, and ensure you make your repayments on time!