Big Questions For Borrowers

How much time would you spend looking for the perfect personal loan? It pays to put in a little legwork.

The Bank of England has been reporting for some months now that 'consumer borrowing is slowing'. Indeed only the other day it reported that borrowing by individuals on credit cards, loans and hire purchase agreements was growing at its slowest pace for nearly twelve years.That doesn't mean we've stopped borrowing though. The latest figures show that our total debt, not including mortgages, is 5% higher than it was this time last year. So if you're thinking about taking out a loan, here are some tips for finding the best one:Have you shopped around?The cheapest loan on the market at the moment is from the Moneyback Bank. It's the relatively new trading name for Alliance & Leicester and it specialises in online personal loans. Borrow through Moneyback and the typical interest rate is 5.5%. Go direct to Alliance & Leicester and it'll be 6.1%.It's a mistake to go straight to your bank simply because it's the easiest route to take -- you can almost always get a better deal elsewhere.Have you checked the TAR?We're told that we're supposed to check the APR (Annual Percentage Rate) when comparing interest rates but you're better off comparing the TAR (Total Amount Repayable) instead. APRs are calculated in different ways by different companies so it's much easier to check to see how much money you will actually pay back overall.Do you really need PPI?Payment Protection Insurance pays your monthly repayments if you can't work due to accident, sickness or unemployment, and pays off your loan if you die. But frankly it's a rip off adding as much as a third to the cost of a loan with stringent rules about when the policy will pay out. You'd be better off putting the premiums that you've saved in a high-interest savings account so you've got a small fund to fall back on if you do fall sick or lose your job.If you want the extra piece of mind though, look for a stand-alone policy which will invariably be cheaper.Have you read the small print?Find a magnifying glass and read the small print thoroughly. It'll be tedious but you'll find out important things like how much you'll get charged if you settle the loan early (more than 70% of people settle up early).Is the loan unsecured?You'll be familiar with the phrase 'your home is at risk if you fail to keep up with your repayments'. And the thing is, it is -- which is why it's much better to go for an unsecured loan so you don't risk the roof over your head.And finally, remember that the high street is probably the worst place to find a personal loan.Check out the loans in our Personal Loans centre | Get a better savings account today!