Use a Bankruptcy Loan To Your Advantage
Heres how to use a personal loan to your advantage (even with high interest rates):
- Calculate what monthly payments you can afford BEFORE applying. Knowing what you can afford will give you a more realistic outlook on the advantage of a banckruptcy loan.
- DONT go over this limit. You have been in difficulty once, so why take the risk of going there again. However, it is important to begin to use credit again to help repair your credit rating. It can save you thousands of pounds in the future!
- Don't worry to much about APR rates. High interest rates are to be expected as you are seen as a risk. However, making payments to reduce you balance quickly can help reduce the total interest you will pay.
- Ensure that the lender will allow you to pay off more than the normal monthly payment without incurring any extra costs. This allows you to use any "spare" cash, even if it is just an extra £10 now and then to reduce the outstanding balance, and therefore interest that is incurred over future periods.
- Pay off as much as possible, as soon as possible. Again this reduces the overall interest you have to pay back as you are paying interest on the REMAINING loan rather than the whole amount you took out.
- DONT pay it all off! Sounds strange but paying everything of too soon can be bad. Effectivley loan companies are trying to make money. Someone who pays off the whole loan very quickly looks bad on your credit file. How is a company going to benefit from giving a loan to someone if they can repay all the value straight away? They will never benefit from those high interst rates, and will see you as a "none profit" customer. Therefore, pay off as much as possible (see above) but leave an outstanding balance and keep your account up to date. You are trying to improve your credit rating, and to do this you need to maintain credit laons, etc
