There are many different equity loans available and it can be difficult knowing which one might be the best for you. It is worth doing some research though as the loans can vary quite a bit and you want to make sure that you find the one that suits you the best. It can be wise by thinking about whether there are any things that are important to you when you need to get cash now. Below are some factors that could be important that you might want to consider when you are choosing but there may be other things that are important to you too. Cost The first thing that most borrowers will want to check out is the cost. They may worry that the cost of the loan will get too much for them and that they will not be able to afford it. This could be the case and so it is really important to compare different lenders and see how their costs vary. Look at the interest rate as well as any other fixed fees so that you can work out exactly how much the loan will cost. If you can, it is a good idea to calculate the total cost of the loan and then you can compare this to other lenders and see which will be the cheaper ones and which are dearer. It is worth bearing in mind though that you may not feel that the cheapest one is the best once you compare on other factors. So, although you do not want to pay more than you have to, it is important to bear in mind that you are looking for value for money rather than just the lowest cost. Repayments It is really important to make sure that you will be able to afford the monthly repayments. If you miss any of these you will have to pay extra fees and you want to avoid having to do this. Therefore, it is wise to start by calculating how much you can afford to repay and then you can look at the different options you have and see which fits best with that. If it looks like you will not have enough to repay any of them, then you may need to see whether you can make permanent changes to increase your income or reduce your spending so that you can. This may be trickier for some people than others but it is important to make sure that you know how many repayments there will be so that you can be sure that you will be able to make all of those necessary payments. It can be a bit scary but you need to be aware so that you can back out now if you need to. Customer Service Having a good customer service is really important to some borrowers. It can give you peace of mind if you know that if you have a question or problem that there will be someone there who will be able to help you. It can be tricky to know how good the customer service is unless you actually contact the customer service department yourself. This should be easy enough to do and it will allow you to get any questions you have answered as well as finding out how competent they seem to be and how quickly and efficiently they get back to you. Reputation of Lender It may be important to you that the lender has a good reputation If you have never heard of them, then it can be quite hard to know what they are like. It can therefore be worth asking friends and family if they have heard of them or ever used them. If they are no help then it could be good to look online and see if you can find any reviews. Although people tend to only write reviews if they are unhappy so it might look like a lender gets lots of bad things said about them. To get a balance make sure you look at a selection of lenders and this will help you to pick between them. Conclusion There are quite a few factors that could be important to you when you are choosing a lender. It is a good idea to think about which of these factors might be important to you and then comparing the lenders to see which fits your criteria the closest. If you find this too tricky you could ask a financial advisor to do it for you but you will have to pay them. This is why a lot of borrowers will choose to do it themselves. It will take some time to do this but it will be worth it when you sign up with the lender that offers you the best value for money.
When we take out a loan, we will sometimes have a choice between a fixed rate and a variable rate. It is not always easy to decide which of these might be the best for us. It is therefore worth making sure that we have an understanding of what they are and the differences between then so that we can pick the one that suits our needs the best. You may decide to use a financial advisor who will be able to explain this to you. However, you may prefer to do the research yourself or you may not be able to afford the financial advisor. Below are some very brief explanations about what the two types of loans are and how to choose between them, which will help you to start the research process. Fixed rate loan A fixed rate loan will have a fixed rate of interest and this means that your repayments will always be the same. The fixed rate could continue for the full term of the loan or it might be fixed for a certain time period and then become variable after that. Many people like the certainty they get with a fixed rate loan in that they know exactly how much they will be repaying each month. They can budget and will not be affected by any changes in interest rate. This can protect them against increase but it does mean that if the rates go down then they will continue to pay at the higher rate. If the loan moves onto a variable rate then this rate could be higher than other variable rate loans and so it might be sensible to switch to a cheaper lender. However, this may not be possible as with some fixed rate loans you get tied in to that lender for a certain time period. This can be a problem if you want to move to something cheaper even if you are in the fixed rate period so it is worth checking this. You may also be charged for paying the loan off early, which is what you will do if you change lenders as you will pay off the one loan with another. So, check this too before you sign up to the loan. Variable rate loan A variable rate loan can change its rate of interest at any time. This is likely to be when the prime rate changes, although some lenders will change their rates in between prime rate changes. As soon as the prime rate goes up, lenders are likely to increase the loan rates that are variable and you will end up paying more. However, if the rates come down, they may lower them. They do tend to be slower to respond to a decrease than an increase though. There is less certainty with this type of loan as you can never be totally sure how much you will be paying each month. This might be a problem if you have a very tight budget but if you can be more flexible then it may not be. Which is best? Which type of loans suits you the best will depend on your financial situation. If you struggle to budget each month, then it would be sensible to take a fixed rate loan so that you know how much you will be paying. Choose a loan with repayments that you will be able to afford. If you have more leeway with your budget then you may feel happy to have a variable rate. You might feel that you would rather have the opportunity to have a reduction in your interest rate and risk the rate going up rather than being tied into a fixed rate. You may not like the idea of being tied into something which you cannot change. It can also be wise to think about whether rates are likely to go up or down. A fixed rate loan will protect you against increases in the rate. It can be hard to predict whether the prime rate will go up or down, but you may be able to make some estimates. If it is low, for example, it is more likely to go up than down. Listen to what economists and politicians are saying about the economy and what might happen. No one can predict precisely though so try to avoid taking a risk but weigh it up sensibly. You might be able to change lenders anyway if you feel that yours is not competitive. However, you will need to check carefully as some will have extra charges if you decide to switch lenders, so find out before you take out the loan. If you cannot see it easily then you should be able to contact their customer services department and ask them.