Everyone needs a little help getting through lean patches from time to time but if you need finance for an extended period of time, you might want to consider long term loans. Credit cards, overdrafts and payday loans are all suitable for short term borrowing but if you use them as a form of finance in the longer term you could end up paying far more.
There's lots of reasons why you might want a long term loan: home renovation, a new car or for a wedding. Borrowing money means you don't have to wait until you've saved up enough to cover the cost so it's a useful option. However, there's lots of lenders in the market so it can be difficult to decide which one to use. This guide will help show you what to look for in a lender.
When you're considering whether to apply for finance, one of the first questions that will arise is "how much will this cost?" And understandably so; if you aren't sure whether you can afford the repayments, committing to a long term loan is not a good idea.
A long term loan calculator is usually included on the website for the lender and this is a helpful way to tweak the repayments to see the best option. Changing the term of the loan and how much you borrow will give you an indication of which set-up best meets your needs.
The loan calculator isn't the only way to see how much a loan is going to cost. The APR (Annual Percentage Rate) is the figure which shows just how competitive the loan is as it includes all the fees, interest and admin costs. The APR won't tell you exactly how much your repayment will be in monetary terms, but its a quick and easy way to compare lenders to see which one is offering the best deal. A lower APR means you'll be paying less in interest and charges. However, you won't necessarily be offered the APR advertised by the lender; they're only obliged to offer the advertised rate to around two thirds of applicants. Therefore if you're accepted for a loan, make sure you check the exact APR you've been offered to see if it's competitive compared to other lenders on the market.
A lender who matches your needs
There are many lenders on the market who offer long term personal loans but if you look more carefully, you'll find that many specialise in a particular area. Keep in mind the type of long term bank loans you're looking for and you might be able to narrow your search.
For example, some lenders offer unsecured long term loans while others only offer secured loans. There are also lenders who specialise in offering a bad credit long term loan; these aren't usually the cheapest long term loans so if your credit rating is good you may want to look elsewhere. You can find out more about getting a loan when you have a bad credit history.
Other factors to consider could include the term of the loan, the amount you want to borrow and the purpose. Don't be tempted to borrow more than you need or repay it over a shorter period than you can afford just to meet the criteria of one lender. There's all kinds of long term loan companies on the market so make sure you apply to one which matches your specific needs.
Check out reviews
The amount you have to repay is just a small portion of what makes a good lender. Undoubtedly you'll be looking for a competitive deal but there's other factors to consider too. Good customer service and accurate administration of your repayments are important too; and if anything goes wrong you'll need to know that the company will be committed to putting things right.
You don't need to stick to well-known banks for borrowing, providing you do your research. Look out for testimonials from past customers as well as checking out sites such as Trust Pilot. Take particular note of any cases where a problem arose; hitches can happen to even the most trustworthy lenders but how they deal with any complaints can be very revealing. A company that strives to rectify any problems is a good sign; avoid those who either ignore their customers or try to shift the blame rather than solving the issue.
No matter how good the deal sounds, your personal security should remain the most important factor. If an offer sounds too good to be true, it probably is! When you apply for a loan, you'll be asked for lots of sensitive personal data so it's essential that you're sure that you're dealing with a lender you can trust.
The Financial Conduct Authority (FCA) regulates lenders and ensures that they treat customers fairly and with integrity and follows an agreed Code of Conduct. If anything goes wrong between you and the lender, you'll have the right to ask the Ombudsman to mediate. This is a free service and provides valuable protection for customers.
You should only use a lender that's authorised to lend money by the FCA. You can check whether they are an approved lender by checking the FCA register for free. The lender should also carry details of the FCA registration visibly on their website.
Aside from the FCA details, there's more obvious details to check too. You should be able to find a name, address and telephone number so you can easily contact the lender should the need arise. An email address and/or instant chat facility is an added bonus but it's unwise to deal with a company that only offers these with no address or telephone number.
There's lots of cash long term loans available on the market but finding a reputable lender and the best deal can take a bit more work. However, if you check out the APR on offer, make sure you only use a trusted lender that's registered with the FCA and apply for a product that is designed for your needs you should end up with the very best finance package available.
If you are not 100% sure whether a long term loan is right for you, we have put together some info that may be of help. Click this link to read our article Is a long term loan right for me, or maybe check out the pro's and con's of taking out a long term loan