Comparing different ways of borrowing is a sensible first step when you want to take out a loan. There are different types of loans with their own term, interest rate and amount to be borrowed. Common loans are the personal loan, revolving credit and overdraft on the current account.
Compare different ways of borrowing
If you want to take out a loan, it is wise not to rush into it. It is a good idea to compare different loans in order to find a loan that suits you best. There are different types of loans , each with their advantages and disadvantages. This article discusses the most common loans.
The personal loan is a form of loan that is relatively common. With a personal loan, the amount , interest rate and term of the loan are fixed when taking out the loan . This means that you repay a certain part of the loan every month. This consists of the repayment itself and the associated interest. The advantage of this loan form is that you know in advance how long it will take to repay the loan, and that you can do this at a fixed interest rate. This reduces the chance of surprises.
Revolving credit is a special form of loan. With this loan form, you agree with the lender on a certain amount that you can borrow as much as possible. When you decide to withdraw money, you pay interest on this amount. With most lenders you can repay the amount withdrawn when you have more financial space. The interest rate is variable. Revolving credit is a very flexible form of borrowing .
The current account is overdrawn
This form of borrowing is not considered real borrowing by many people, although it is. Many banks offer their customers the option to temporarily withdraw more money than they have in their current account. This provides financial breathing space, and bills can always be written off. This is a very popular form of loan, many people are sometimes overdrawn on their checking account . However, overdrafting on your current account is a very expensive form of borrowing. Banks generally charge a high interest rate.
Choosing the right loan
Which method of borrowing suits you is a very individual matter and depends on several factors. For example, the term, the interest rate and the amount to be borrowed are important factors to take into account when choosing a loan. Some banks offer different interest rates for different terms and loan amounts. It is wise to compare these factors of different loans. There are various websites that offer loan comparisons , including Independer. Once you have decided which loan type suits you best, you must find a bank or institution where you can take out the loan. There can still be quite a lot of differences between the same type of loan. Some banks offer favorable interest rates for people who have already purchased other products from their bank.