What features should you look for when choosing a personal loan?
If you've never taken out a personal loan, there can be a lot of information to consider. These are a few of the things you might consider;
If you happen to come into some extra cash, it's important that your personal loan has an extra repayments facility to help you pay down the loan faster.
If an unexpected financial situation arises where you need to withdraw some of the funds you've paid into your loan, a redraw facility will allow you take money back out.
Aim to select a product that includes no minimal, upfront, ongoing, or early repayment fees.
Most personal loans start at a minimum loan of $2,000, with maximum amounts calculated depending on what you can afford.
Should you apply for a fixed rate or variable loan?
When choosing a personal loan, it's helpful to know which is the right loan type for your circumstances.
A fixed rate loan means your repayments are set at a certain figure, shielding you from interest rate rises for the life of the loan. You can also pay extra off your loan, although it's wise to check the limits on the number of additional payments you can make.
A variable rate loan gives you the flexibility to pay extra off your loan when circumstances allow, while you can also redraw those funds if and when you need them. However, variable loans are subject to interest rate rises, so it's important to calculate your ability to make repayments both now and in case of a future rate hike.
What is the duration of a loan?
The term of your personal loan will depend on a range of factors, including your financial situation and the reasons you are taking out the loan. Most personal loans have a standard minimum term of 1 year, and can range up to a maximum of between seven and 10 years. However, it's important to remember that the longer the term of the loan, the more you will pay in interest.
How are repayments calculated?
Once you take out a personal loan, you'll be liable to make regular repayments. These repayments are calculated based on the full amount of your loan, as well as any related fees, the term of the loan, and interest rates.
When do you make repayments?
One of the benefits of signing up to any loan is that you can determine how often you make the repayments. Typically these repayments can be set weekly, fortnightly, monthly or on an agreed date, allowing you to select the time frame that fits your lifestyle.
How do you make repayments?
There are a number of options available for making your loan repayments, so you should check with Our Broker to find the method that suits you best. Options include direct loan repayment, direct debit, and even phone banking.
What happens if your repayment is late?
There may be unexpected circumstances where you are late in making a loan repayment - sometimes this is unavoidable. However, it's important to know that most lenders will charge you for a late payment, so make sure you check the fine print when you sign up to the loan