European Golf Editor: In today’s economic climate, many people are interested in raising finance for home improvements such as golf greens. Santander have kindly provided this article which explains the pros and cons of three types of borrowing; namely bank loans, consolidation loans and credit cards.
The Best Way to Borrow
Consolidation loans are often considered the best way raise capital. But do the figures really stack up? Well, the success or failure of debt consolidation depends largely on your specific circumstances – how much you owe and to whom. The most important thing to examine is whether you will really be paying less over time with a debt consolidation loan.
It is always worth using one of the many aggregators such as that found at the popular “The Motley Fool” website to compare loans before choosing the one that is right for you. It may or may not be the one with the lowest APR.
Smaller repayments in the short term are a tempting way to deal with an incredibly stressful situation, however it could work out that you actually pay more interest over the time scale of the loan. This means that the loan ends up costing you more in the long terms – significantly more!
Remember, if you have debt problems, you’re unlikely to qualify for the lowest rates advertised by credit card companies. These rates serve more as an incentive to get people interested in the product.
It is important to remember that no matter what size the debt, credit card companies cannot take your house, whereas a bank loan which uses your house as collateral could result in your property being repossessed if you default.
There are, though, benefits with consolidation that you don’t get with credit card companies, whose aim it is to keep you on a payment plan. These payment plans will, on average, require you to pay back between 5 and 6 times your original borrowed sum. Consolidation loans usually have lower rates of interest, and don’t apply extra charges.
The key is still to work out whether you are in fact paying more over time and to figure out what happens if you default on this new loan.
As long as you familiarise yourself with the small print and understand the implications before you sign anything, you won’t come unstuck further down the road. Think of the problem in the long term rather than just reaching for short-term solutions. From here you can make a sensible decision as to whether this sort of loan suits your needs. When shopping around for the best loan for your needs, make sure that you take a broad view of the market and consider not only your cash flow, but also the overall cost of the loan in the long term. For a reasonable rate of interest, check out Santander’s website, where you can find quotes on loans.
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