With a personal loan, you borrow a fixed amount over a fixed term and usually pay a fixed amount of interest. You then repay this over time, making set monthly repayments. Your credit rating is very important if you want to take out a personal loan poor credit will mean high interest rates, or a potential refusal for credit. When comparing personal loans, make sure you review the fees and charges associated with the loan and check small details such as whether you can overpay or defer payments to get a fair comparison.
Bad credit loans. If you have a bad credit rating, your choice of loans will be very limited and its likely that youll have to pay a high interest rate.
The FTC recently sued several online payday lenders for violating personal loan rate of interest comparison laws. The lenders allegedly lied about how much their loans would cost, required borrowers to allow the lenders to take money from their bank accounts automatically, and threatened to sue the borrowers or have them arrested for non-payment.
Here's how the scam allegedly played out: The online payday lenders required borrowers to provide bank account information so they could deposit the borrowed funds electronically and withdraw the repayment amount from the account later.
The lenders claimed that the repayment amount would be the amount borrowed plus a one-time finance fee, and that this amount would be withdrawn on a particular date. Instead, the lenders made multiple withdrawals from the borrowers' bank accounts and assessed a new finance fee each time. The result of this scheme.
The borrowers paid much more than the stated cost of their loans. In a typical example, a person borrowed 300 with a stated one-time finance fee of 90. The borrower expected that the loan would be repaid in a single withdrawal of 390.
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It means you have to pay even more charges and interest so you end up owing much more money. What you should do instead is seek debt advice and agree a repayment plan that you can afford with the lender. Before rolling over your loan, the payday lender must refer you to free debt advice. And since July 2014 they cannot roll over your loan more than twice. Get help from a free debt adviser. Personal loan rate of interest comparison youre struggling with bills or finding it difficult to deal with a payday lender, contact one of these free, confidential debt advice services: The adviser will be on your side theyll help you get your debts under control and can negotiate with the lender on your behalf.
Tell your lender as soon as you start working with the debt adviser. Follow up your phone call with a letter you can use Whichs letter telling a payday lender that youre working with a debt adviser. Once youve done this, your lender must give you a reasonable amount of time to come up with a repayment plan before using debt collectors.