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How to Choose the Best Method of Borrowing

by James McGregor

If you need to borrow some money, then you may feel rather overwhelmed by all of the types of loans available to you. This is not at all surprising as not only are there different types of borrowing but there are lots of lenders as well and this means that you will have lots to choose from. There are some ways that you can get help though and it is wise to do some research and get lots of information so that you can make a well informed decision. 

Consider a Financial Advisor

Some financial advisors will be trained in advising about borrowing. It is important to know that they will charge an hourly rate but if they are independent, this means that they will be unbiased and be able to let you know which type of borrowing will be best suited to your needs. If you are only borrowing a small amount, then the cost of the advisor may not be worth it. However, if you are borrowing lots of money, perhaps a mortgage, then it could mean that you will save a significant amount of money – much more than the cost of an advisor, so it will be worth using one in this situation.

Talk to Your bank

It can be good to talk to your bank about all of the different lending options that they have. This will allow you to learn more about what options are available and therefore you can think about which might suit you the best. They may even be able to advise you on which will be the best. It is worth remembering that your bank will only be able to tell you about what they offer and therefore you may not hear about all of the loans available to you. They will also be biased towards their products and will not tell you about loans offered by any other lender apart from themselves. You may find that there are cheaper products available elsewhere but it can still be useful to find out what they have and more about how those loans work. You will be able to ask them lots of questions but make sure that you do not get talked into a loan, without going away to check out your other options first.

Talk to Other People

It can be handy to talk to people you know about borrowing money. Most people will have taken out loans at some point and so they will know about them and how they work. They will be able to tell you about their experiences and tell you whether they would recommend certain types of borrowing and what they would do in your situation. It can be very useful to talk to a few different people as they will have different experiences to each other and you can decide if you want to go ahead, after talking to them. 

Do Online Research

It can be handy to do some online research as well. Find a trusted source and look at information about all the types of borrowing. It can be useful to find out things such as how much you can borrow, what the rates are like and what the repayment terms will be. These will vary a little between lenders but it is good to find out what you should expect in general terms. This will allow you to be able to have a look at the different products and judge which will be best for you depending on how much you want to borrow and how long for. 

Comparison Websites

You can compare different lenders on some comparison websites. This will help you to be able to see how much you will have to pay with each one. It can be a good idea to check these, but it is also important to remember that not all lenders will be on there and so you may find better deals elsewhere. Comparison websites are not all the same as well and this means that you might find that there are some websites that will have different lenders on them and so using a few can give you a better idea of the range of loans and prices available to you. It is important to note though, that lenders may charge more than their advertised rates. This is because they will often charge an increased rate to borrowers that they feel are riskier, such as those without a good credit record. Therefore, make sure that you actually check directly with the lender and that you are sure how much you will be paying, before you sign up for anything. 

It might sound like quite a lot of effort, but it is worth it. It is important to have a good understanding of all of your options and make sure that you choose the one that will be most suitable to you. It could end up saving you a significant amount of money and therefore you will find that it is worthwhile. Borrowing too much or at too high a rate because you go for the first option you see could be very costly. You may even be able to find ways to get the money without borrowing, such as saving up or selling things, depending on how much money you actually need. Once you realise the costs of borrowing, you may decide that you would rather find alternative ways to get the money or just not worry about it at all. It will depend on what you need the money for and whether you feel that it is worth paying that extra money in order to get it.

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