When money is tight: Choosing the right lender this Christmas

Choosing the right lender

Christmas time can be a difficult period for a lot of people. While there’s a lot of joy in the festive season, there’s also a great deal of expense to worry about, not just in the form of gifts, but also in the costs of things like heating and energy for your home too.

If you’re considering getting a loan to help you manage the Christmas period, or you simply want to make sure that you’re getting the best deal on your lending during the festive season, then you’ve come to the right place. Here, we’re going to look at what you need to think about when you’re choosing festive funding, regardless of whether it’s for Christmas purchases or not.

Deciding Which Loan Is Right for You

Before you can choose the perfect Christmas loan for your needs, you need to think carefully about what you’re going to be spending your finance on. For example, if you’re simply looking for a way to fund the Christmas gifts that you’re going to give to your friends and family this year, then a small personal loan might be enough to ensure that you have all the cash you need. You can then pay the cost of this loan off in the year that follows, according to the terms and conditions that have been laid out by your loan provider.

On the other hand, if your Christmas gift to yourself is something like a new vehicle or a new home, then you might need a substantially bigger loan depending on how much you’re going to spend. This might mean that you need to use a secured loan such as a mortgage, or a secured form of finance to afford your new car. The important thing to remember about secured loans is that if you do not have the cash to pay back the money you owe according to the terms of the debt, then you could risk losing an important asset to your lender.

To make sure you’re getting the right loan for your needs, make sure you think about the following things:

  • How much money are you hoping to borrow and how long do you need to pay that money back?
  • Do you own a property or an asset that your lender could use to secure your loan?
  • Do you have the capacity to meet repayments on time?
  • How is your credit history? If you have bad credit, you may need to seek out a specific kind of lender.
  • Are you likely to repay your loan faster than the term suggests? If so, are there any penalties for this?

Points to Remember When Choosing your Lender

Once you know what kind of loan you need, you can begin to think about which lenders currently on the market are capable of offering you the best deal. Keep in mind that you don’t necessarily need to go to a bank to get a loan for Christmas you can also consider alternative options like credit bureaus building societies, or peer to peer lending.

When comparing lenders start by going online to look at the different APR available from people in your local area. This will give you a good idea of where you might want to apply to get the best deal. However, keep in mind that you won’t necessarily get the rate that’s advertised. Instead, providers are only expected to give this rate to just over half of the people who apply for a loan with them. Other things you might need to look out for include:

  • Additional hidden fees: Many providers impose agreements and administration costs on the people that borrow from them when they’re setting up new loans. Lenders may also charge certain late payment fees if you’re not careful so make sure that you repay your debt on time.
  • Payment by direct debit: If you want to make sure that you always make your payments on time, you could ask your lenders whether it’s possible for you to make payments through direct debit each month.
  • Payment protection insurance: A lot of lenders used to sell PPI at the same time a loan was taken out. However, in the last few years, the Financial Services Authority has clamped down on this process due to an overwhelming amount of mis-sold insurance. Make sure you know whether you need PPI before you start paying for it, and ensure that you double-check the terms and conditions of your loan so you fully understand what you’re getting into.

If you’re struggling with finances over Christmas why not read my tips on how to have a debt free Christmas  and all about Christmas spending traps to avoid this year.

Do you struggle with finances over Christmas? Do share a comment below.

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*This is a collaborative post 


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