Whether you’re consolidating existing loans, planning a holiday or need to buy a new car, a loan can be the answer if you don’t currently have the funds.
Loans: the Lowdown
A loan is a financial transaction in which a lender gives a borrower a sum of money. It is expected that the loan is paid back in full, normally with interest added to the originally agreed loan – also known as the principal.
The specifics of the loan will be detailed in a promissory note or other contract. The borrower must agree to the terms of repayment including the amount that is owed, the interest rate and the dates the repayments should be made by.
Defaulting on a loan payment may incur financial penalties so making sure that you have a sensible repayment plan is crucial.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Debt consolidation is not always the most suitable option, consolidating debts must be carefully considered. It will usually mean more interest over a longer repayment term and there may also be early repayment penalties on your current mortgage, you should think carefully before securing other debts against your home. There are other ways to manage debt such as free debt advice charities, you can find out more by contacting the Money Advice Service http://www.moneyadviceservice.org.uk/en/articles/where-to-go-to-get-free-debt-advice these services may be more suitable for you