There are many reason people take out loans, from home renovations to dream holidays or for many, to consolidate existing debts. But one of the main things to think about when taking out a loan, especially one of a very high value, is whether or not you are able to meet the required monthly repayments.
Depending on how much you choose to borrow and who you borrow it from can cause the repayments to vary greatly. Some companies may even charge you a higher rate of interest if you have been affected by a poor credit score.
Loans and your credit score
Did you know that some companies, whether that is a loan provider or simply a comparison company, will record a simple search or application on your credit file and this information can then lower your overall score. So if you apply for a loan which gets rejected, this appears on your credit report meaning that any other loans you look at taking out are less likely to be granted. At NowLoan.co.uk you can compare prices of various different loans without the hassle of it effecting your credit score.
How much would a loan cost me each month?
As we mentioned previously, the price of your monthly repayments on a loan can vary greatly depending on various factors. But let’s take for example, a loan of £10,000. How much would you be likely to be paying back to your creditor each month? It is important to bear in mind that when you take out a loan, you will be charged interest (a percentage of the loan, repayable alongside your repayments). The average percentage for a loan in the UK is between 10-28%, so for this example, we will presume that the interest rate stands at 15%.
Based on a loan calculation, for a loan of £10,000 over a period of three years and including the 15% interest, the monthly repayment would come in at a little over £342. The interest you would pay on this loan would total £2314, this is essentially your fee for borrowing the money. Below are some other repayment options dependant on the time period over which the loan will be paid back.
For a very short term loan over one year, the repayment would be £898 per month, although it is rare that such a large loan would be paid back over such a short time. The interest that you would pay would total £777For a loan over five years, the monthly repayments would come to just under £233, with a total interest amount of £3979.If you were to borrow £10,000 over a period of ten years, you could expect to pay in the region of £155 in monthly repayments and would be looking at spending a total of £8674 in interest.
It is evident that the longer the time period over which you borrow the money, the more it will cost to take out the loan. It is worth noting that once you have taken out a loan, you do have the option to pay the debt off in full at any time before the end of the contract, thus reducing the amount of interest you would pay quite significantly.
It makes sense that when taking out a loan to factor in thing such as interest charges, monthly repayments and how long you wish to borrow the money for. Your interest cost will vary according to the time period over which you repay the loan and will also vary according to the individual rate of interest which you are offered.
Credit scores can be affected by loan applications and by borrowing money. By searching for a £10,000 loan on NowLoan.co.uk you can compare prices of loans which you will most likely be eligible for without an impact on your credit report.