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When is the Right Time to get a Personal loan?

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A personal loan is something that many of us take advantage of from time to time. They are unsecured which means that you do not have to have a home or car to secure against it so they are more available to everyone. You tend to be able to borrow more than £1,000 and repay it in instalments. If you are considering getting a loan like this, then you may wonder when a good time might be to get one out. It is worth considering a few things to help you make up your mind.

Can you afford the repayments?
It is well worth finding out how much you will be expected to repay each month and how long for. This will not only allow you to calculate the full cost of the loan, but you will be able to think about whether you are likely to be able to afford the repayments. You will be able to see the difference between the money you have coming in and going out and then you will know whether there will be enough of this money for you to be able to afford the necessary repayments. If you have enough money then you will know that you will be able to afford them. However, you may decide that you do not have enough. In this case you do not have to forget the idea of having a loan but it is a good idea to see whether you can make changes to your lifestyle so that you can free up enough money each month to afford the repayments. It may be that you will be able to cut back in a few areas or find a way to earn more money so that you will be able to afford them.

Are loans competitive at this time?
At certain times loans will be more expensive because interest rates are high. The interest rate varies depending on the rate sent by the Bank of England and so if you want a cheaper loan, you will need to get one out when the rates are low. Although rates can fluctuate month to month, normally they are fairly stable and will only go up or down a little bit each year. Therefore, you will need to decide whether you are prepared to wait until rates are lower before you take out the loan or if you are happy to go ahead anyway.

Will interest rates rise?
Interest rate rises are not hugely predictable but with some common sense you should be able to work out whether rates are more likely to rise or fall. For example, in a time when rates are low it is more likely they will go up than down. However, if inflation and economic growth are slow then there is more chance they will go down too. If the rates are likely to fall, then you may want to delay taking a loan as you may get a better deal, especially if the loan has a fixed rate. However, if you think the rates may rise you may want to get a fixed rate loan quickly before they go up. However, if you are on a variable rate then a likely rate rise will mean your interest payments will go up.

It is always wise to assume that interest rates might go up and plan for that. Make sure that you can not only cover the repayments as they stand but also that you will be able to pay them should they go up due to a rate rise. You should even be able to estimate how much they might go up to and work out the extra that you might end up paying so that you can calculate if you will be able to afford it.

Are there other options?
It is always wise to think about what other options you might have. There are many things that you could try in order to get the money that you want and it is good to consider them all. It might be that you have already done this and realise that your best option is a personal loan. If this is the case then make sure that you compare different lenders to find the loan that is best for you. Be sure to compare the APR rather than the monthly interest rate as this will allow for any administration fees that they include in the repayments that you have to make. Also make sure that you consider other features as well as the cost when you are comparing the loans. You may find that there are other things that are as important or more important than the cost such as the reputation of the lender or the level of customer service. It is worth taking the time to find out a bit more so that you get the best loan for you and your needs.

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