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8 Top Tips for Getting a Personal Loan

Lower interest rates, a stronger credit policy, and a booming expat contingent in the UAE mean lending is on the rise.

From renovating a new home, to paying for your children’s education costs, there are many reasons why people take out a loan. They offer a life line to many who may not be able to pay for what they need right now, but with a boost to their finances can start a new chapter in their lives.

So with personal loan applications on the up, consumers want to know how to get the best deal with so many banks competing for their business. Here are a few tips to help with that dilemma that many have:

  • Make sure you only lend what you can afford

You should take an honest look at your finances, complete with your salary, household bills and any other outgoings – and then decide on an amount to lend. If there is any doubt in your mind that you will be able to keep up regular repayments based on your situation, then you should adjust your expectations. It is vitally important in the UAE that you keep up with your loan repayments, as it is taken very seriously.

  • Check your credit rating

It’s always a good idea to check out your credit rating before you make your application, as your history can have a significant impact on your success. Not just that, however, but even if you are successful, if you have a poor credit record, then you might find you have a higher APR on your loan. However, by finding out before you make an application, you can have all the facts in front of you so you can shop around and prepare yourself for the situation.

  • Look at the total amount payable

Don’t look at the headline amount that you will need to pay back – the key to a personal loan is to read the terms and conditions, and be clear about what the total amount payable is. Not just this either, but also the monthly payments – as this will give you a better picture about what you’ll actually pay back, rather than just relying on the headline APR rate.

  • Think about early repayment

Although the whole idea of a loan is for you be able to borrow a large sum of money and be able to pay it back over a lengthy period of time, it is worth considering early repayment. If you think there is even the smallest of chances that you could pay it back early – maybe you plan on getting your finances under control as soon as possible, or you might just not like having a long debt – then definitely consider it. Just be aware that the bank may charge you a penalty for bringing forward the completion of your loan.

  • Don’t apply for too many loans

 Quite simply, applying for several loans means that you leave a ‘footprint’ every time. So you are more likely to appear as a higher risk to your bank – and your credit rating will be pushed up.

  • Use a personal loan calculator

 The safest way to make sure that you don’t go over what you need when you’re borrowing; and to give you a better idea of the total and monthly amounts you’ll owe to the bank, as well the duration of the loan, you should always use a personal loan calculator. Seeing the details in black and white can put things in perspective, and make you realistically confront your limits.

  • Avoid Payday Loans if you can

 In times of financial hardship, some can turn to payday loans to solve their problems. However, although they provide you with the cash you need straightaway, they usually also come with huge amounts of interest. And so, you will end up paying back the loan for a much longer length of time than with the more sensible option of a personal loan, and with a lot more interest as well.

  • Think about the length of the loan

 This is perhaps one of the most important factors of your application. You will need to consider that the longer the term of your loan is, obviously, the longer it will take you to pay off your loan off, but also the more it is likely to cost you too for the privilege. However, if this is the only way you can manage the repayments, then it is worth doing so in order to avoid missing repayments for larger monthly amounts. It is only advisable to pay off your loan in a shorter timeframe in larger instalments if you know you can realistically afford this.