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Taking out a personal loan

May 21st, 2011 -

Personal loans are fixed amount, fixed interest, fixed term loans provided by a financial institution to an individual person.

Interest rates are generally higher than for other types of loans, but usually lower than a credit card.

Here are some things to think about before taking out a personal loan:

  • Ask yourself if you really need to borrow the money. Could you cut back on something and save instead?
  • Carefully work out what the personal loan will cost you each month and in total over the entire period before committing yourself.
  • Try not to borrow more to repay an existing loan unless it is beneficial for you In some cases it may be better to get a debt consolidation loan to repay all of your debt. You could also talk to your financial institution instead about the possibility of reducing the interest on your existing loans.
  • Make sure you understand all the fees that may be charged. Many personal loans have an establishment fee.

If you want to determine whether a Personal Loan is right for you, contact us, or better still, join our Money Coaching programme now!

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