Most
people need to borrow money
when they want to buy something large, to buy a car, etc. that
is unless they have enough money in the bank.
Even those
who have a substantial amount of money in their bank account
prefer to keep it where it is, as it is a comforting feeling
to have savings at your back for a rainy day, and no one knows
what the future holds.
Having
decided that additional funds are needed, the next step is
to ascertain the best way to obtain the required loan.
If the
loan is for a car, caravan, motorbike or motorhome purchase,
it is possible to be granted a loan
through a dealership.
When wanting
to carry out home improvements, a loan can be granted by the
home improvement company.
If someone
wants to splash out on a luxury holiday they may require a
loan to take a trip to their dream location, and can enquire
at their own bank.
There
are however drawbacks with the above methods of raising funds.
Firstly,
by obtaining finance from the dealer you must pay the full
retail cost for the car, etc., and the interest rates can
be high these days, unless the manufacturer is offering a
special finance deal.
It is
usually unpopular vehicles that are available at bargain prices.
After all, you do not see any deals or reductions on the cute
little Fiat 500.
Using
a homeimprovement loan arranged by the home improvement company
is expensive, at around 25% APR and this makes improving and
adding to the value of your property very costly.
Holiday
loans from banks normally have a maximum repayment period
of twelve months.
Homeowners
are in the fortunate situation of being able to obtain money
cheaply.
These
loans are remortgages and homeowner loans, also known as secured
loans, or even second mortgages which is exactly what they
are.
A remortgage
at present can cost from as little as 2%, and a secured loan
from about 9%.
There
is no contest between these two home loans and the other kind
of loan for those carrying out home improvements.
As holiday
loans, they can be spread over any period that suits your
pocket up to as long as twenty five years.
When used
for vehicle purchase, it becomes possible to obtain a bargain
by buying the car, etc. privately, saving normally at least
a third on the cost.
In addition
to these purposes, remortgages and secured loans also double
as debt consolidation loans which enable a homeowner to make
massive savings by rolling their credit card debts, personal
loans, etc, into one lower repayment each month.
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