Usually the main criterion which is considered before taking a loan is the interest rate. Loan terms and conditions are also very important but an amount of extra money you are going to spend depends totally on a percentage. Literally the interest rate is a cost of using the loan principle. Nonetheless, there are some other points which should be taken into consideration before making a decision whether one or another loan suits you the best way or not. Every loan, no matter if it’s secured or unsecured, long-term or short-term one, needs an extremely serious attitude and understanding of all the pros and cons.
As it has been mentioned above, interest rate can be considered as the most important aspect. The lower it is the better for you because there will be no need to pay a lot for using a credit. Still there are two types of percentage: flexible and fixed one. Before making a final decision pay attention to the details and think what is better for you – to pay fixed interest rate during the whole loan term or to start with paying higher interest rate and end up with paying a small one. However, most personal loans have fixed interest rates when home and car loans may have flexible ones.
Another point which has to be considered is a loan fee. Different kinds of loans may have various charges set by the lender for a precise group of customers. Fees usually can be charged separately on a loan or its cost can be included into a common application process.
Secured or Unsecured
Basically, there are 2 loan types – secured and unsecured ones. If you can provide to the lender any collateral, for example, a car or a house as a guarantee that you will pay off the loan, than it’s called secured. In case you have nothing to provide and the only option for the lender is to believe you then the loan is unsecured. For example, Ontario payday loans service provides unsecured lending products. As any unsecured loans they have relatively high interest rates because of risks taken by lenders. In case you will fail to repay a secured loan you may lose the property this loan is secured against.
Every loan has different repayment terms. Usually long-term loans have lower interest rates, while short-term lending products have higher ones. So take a look at your particular situation and think well, what option really suits you. Loan with short repayment term can be quite expensive, while a need of making payments during a long time period will keep you in debt longer. The interest rate may look quite appealing, so make sure when you will have to make a final repayment.
Before putting your signature on a document, read carefully each point of a contract to avoid unpleasant surprises. Do not trust the advertisements completely – it’s clear that nobody will tell you about pitfalls and drawbacks at first, all the lenders try to get you focused on positive sides of the deal. Stay thoughtful and understand that a loan is a serious financial commitment.