Protecting your interests – avoiding extra loan costs

By | September 2, 2016

When taking out a personal loan, you want the best terms and conditions for you. But sometimes they come with costs or conditions that people don’t always spot, or aren’t aware of in the first place. As a result, the loan costs them more.

No one wants to pay any more than they have to on a loan. Here are a few tips so that you don’t have to.

Read the terms and conditions
That may seem obvious, but sometimes people are in such a hurry that they don’t actually read the terms and conditions. It’s easy to overlook hidden costs – some of which you can opt out of – that you may have objected to if they’d read them.

This is especially important if you’re looking for a personal loan in a foreign country. If they’re not in English, have them translated. Then make you sure you read them. Once you sign on that dotted line, it’s too late.

Keeping the interest in your interest

A bank may advise you to choose a longer repayment term so that you can make your payment more manageable. The repayments will be smaller, true, but the bank will be earning more interest if you pay over a longer period, so keep the loan term as short as possible. This keeps the cost of your loan down.

Checking the rate of interest

Always check the interest rate on your loan. Is it fixed or variable? With a fixed rate, at you’ll know how much you must repay every month. A variable rate, on the other hand, is a double-edged sword: if the interest rate goes down, great; ifit goes up, it could put a squeeze on your finances.

Investigate the total cost

A lot of people use the annual percentage rate (APR) to calculate the cost of a loan, but sometimes the APR doesn’t tell the whole story. The total amount repayable can offer you a better picture, since it includes the interest and total costs from the start to the finish of the loan term. Check, though, whether this includes an arrangement fee.

Payback time

Of course, once you’ve taken out the loan you have to pay it back. There are several ways you can manage your money to do this. Here are some suggestions.

Go back to basics

Sometimes it’s good to tighten your belt. Make a list of all your expenses during the month. You’ll be surprised how much you spend that you could actually save. Cut out any unnecessary expenses. For instance, why buy a newspaper when you can read the news online? Why take the bus or car to work if you can walk there?

Find a part-time job

Don’t give up your day job, they say. And you shouldn’t when you’ve got a personal loan to pay back. Instead, take on a second job and allocate all of these earnings to the loan repayment. Once you’ve paid the loan back, you may even want to keep it on to make your finances easier in general.


When it comes to repaying your loan, the bank will always be interested in helping you. Don’t be shy about approaching your bank for advice on repaying the loan. They can help you organize a repayment schedule and also offer other hints and tips.

Taking out a personal loan is a big responsibility, one that shouldn’t be taken lightly. The devil is in the detail, as they say, so don’t make hasty decisions. Take time to study terms and conditions, interest rates, and costs. It’s in your interest – literally, sometimes.

For more financial information, you can visit the US Treasury website at

Leave a Reply

Your email address will not be published. Required fields are marked *