Loan Conditions To Consider

When you are choosing a loan, you might think all you need to know is how much you are going to borrow, the term of the loan and of course the rate of interest that you will pay back.

However, there is more to it than that.

One key factor is whether the loan is secured or unsecured. Here we are going to assume it is a personal loan and is not secured so that we can concentrate on the other factors that need to be taken into consideration when it comes to getting a loan.

The first of these factors is whether there are charges for OVERPAYMENTS. This is very important as some months you might have more money available than others, and will want to overpay in those periods.

Some loans either don't let you make overpayments or actually include a charge when an overpayment is made. This is to ensure that they still make enough money as they want from the product because of course if you pay back early and reduce the term they end up getting less money than they would if you paid back over the full term.

So therefore check carefully what the policy is with regard to additional payments against the mortgage loan amount.

The next thing to consider is what the fees are if you make a late payment - are you allowed to miss the occasional payment or will you get clobbered with extra penalties if you ever miss a payment? If you think there is a danger of ever missing a payment then this is something else to consider.

Next up, there is the issue of payment holidays - these are periods that some lenders use that sound very attractive - isn't a holiday nice! However a repayment holiday of a month or so is unlikely to make a product massively better for you financially than one without a repayment holiday, and therefore don't be misguided by it. Check whether interest is charged during the holiday period.

The bottom line is that you should always find out how much you will be paying back in total over the full term of the loan.

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