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Do your research before taking a loan

There are times when your pay cheque just isn’t enough, and that is when the need for a personal loan arises.

You can find personal loan pro-viders everywhere. however, with so many places to choose from, where do you start?

A personal loan is an amount of money, which you borrow from a bank or other financial institu-tions. Ordinarily, the borrower receives a lump sum and in re-turn, he agrees to make regular repayments, usually monthly.

Assuming you have taken out a repayment loan, some of the money you repay will go towards servicing the loan and the rest of your payment will be used to pay off capital and reduce the out-standing debt.

A personal loan can be a good option if you have a number of debts, which you wish to consoli-date into one loan. In doing so, you ought to be able to simplify your affairs and often reduce the overall cost of credit.

Banks and specialist finance companies all offer personal loans, so you will need to shop around. Different lenders have different preferences when decid-ing which borrowers to take on.

As a borrower when you are considering one deal with anoth-er, make sure you are comparing like with like. The interest rate to look for is the Annual Percentage rate (APr). The APr is a method

of making a true comparison be-tween different personal loan in-terest rates. It shows the true in-terest rate of the personal loan you are being offered.

The lower the APr on a loan the better because it means you have less interest to repay — so the loan is cheaper. Interest rates vary, and it is worth bearing in mind that some lenders are only interested in lending to people who they re-gard as a low risk. These people may secure lower interest rates.

Lenders vary in their approach, they will want to ask personal questions about your finances and your plans before making up their mind on whether to lend and at what interest rate.

If you cannot pay back the loan for whatever reason, talk to your lender at the earliest opportunity. They will want to consider care-fully your individual situation. If they reasonably believe your fi-nancial situation may improve, they may be prepared to suspend

loan repayments for a while or ex-tend the term of the loan. In the final instance, they can insist on the debt being repaid.

In this day and age of Internet everything you need is just a click away. So are loans. The loan pro-cess has become easier and more customer-friendly. Consumerism has increased to such an extent that it makes us want things right now rather than wait for months or even years to save enough mon-ey to buy the things we want.

Therefore, today we don’t think twice before committing our-selves to indebtedness. The per-sonal loan schemes are quite promising, no doubt, but we need to be extra careful.

Unsecured loans, such as per-sonal loans are usually very ex-pensive. While availing a loan has become affordable and sim-ple, it does have its drawbacks. Banks offering personals may not always tell you the full story. Therefore it is important to delve deep into any loan offer and make the right choice.

Here are some helpful tips to look out for before you decide to avail a personal loan:

Think twice before borrowing ◗money without security. You

Compare loan fees and rates with different banks and financial institutions before applying for a personal loan

A personal loan can be a good option if you have a number of debts, which you wish to consolidate into one loan. In doing so, you ought to be able to simplify your affairs and often reduce the overall cost of credit

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Emirates Islamic is running a 10-day personal finance campaign, ending September 10, with profit rates starting from as low as 2.49 per cent flat per annum The prod-uct offers fast approvals and high finance amounts up to Dh1 mil-lion for expatriates and Dh3 mil-lion for UAE nationals. Custom-ers will also benefit from pre-approved credit cards and a certificate of takaful coverage.

In addition to the competitive rate, Emirates Islamic’s personal finance is simple, quick and has-sle-free. Customers are on the lookout for a smooth process and it is the speed and level of ser-vice that can make the differ-ence. Whether it is for education, a dream vacation, a lucrative in-vestment opportunity that can-

not be missed, or funds for un-fores een circumstances, personal finance can be a quick and effective solution to fulfil immediate needs.

As one of the leading Islamic financial institutions in the UAE, Emirates Islamic’s personal fi-nance product combines Shari-ah-compliant solutions with highly competitive profit rates and flexible payment plans, de-livered with unprecedented lev-els of customer service. The product is based on the Muraba-ha structure through trading of Shariah-compliant instruments.

Emirates Islamic’s personal fi-nance solutions also offer flexible payment periods of up to 48 months and are available to both, salaried and self-employed cus-tomers. What’s more, customers

can defer their first payment for up to 60 days.

In addition to the perfect per-sonal finance solution, customers can get the Emirates Islamic cash-back card that offers unique sav-ings, such as 10 per cent cashback on Etisalat and du payments, 5 per cent on electronics stores and 1 per cent on all other purchases.

Other features include access to Mazaya Offers, a complimen-tary loyalty programme exclu-sive to Emirates Islamic card-holders offering benefits and discounts on shopping, dining, travel and more.

For details on documentation requirements, customers can con-tact the Emirates Islamic call cen-tre or visit any of the 53 branches that are strategically located across the UAE.

Unprecedented customer serviceEmirates Islamic launches a 10-day personal finance sale starting from 2.49 per cent flat per annum

Emirates Islamic’s personal finance solutions also offer flexible payment periods of up to 48 months and are available to both, salaried and self-employed customers. What’s more, customers can defer their first payment for up to 60 days.

khaleej times / ADVERTISING SUPPLEMENTPersonal and Home loans

may have a better option al-ready available: home equity extension to your home loan, a new loan that uses your property as security, a credit card, or even a rich relative.Y ◗ ou should do a complete and detailed market survey of various options like the inter-est rates they offer, the pre-payment charges they levy, terms and conditions.Consider also a credit card ◗as your source of credit. In-terest rates are higher but credit cards are easier to se-cure and offer greater flexi-bility of repayments.Try lenders with whom you are ◗a regular customer. Take ad-vantage of the human factor. Being a familiar face may earn you some slack if your credit background is smudged.Don’t fill out applications at ◗several financial institutions and have all of them checking into your credit history. This can make you look desperate and lower your credit score.Be honest about why you want ◗the loan. Your bank may be able to offer you a loan option that better suits your circum-stances. There are an increas-

ing variety of different types of personal credit these days; car loans, commercial loans, leas-es and home equity loans are just some of the examples.Is the interest rate fixed or vari- ◗

able? What up-front, annual or ongoing fees are charged? Compare loan fees and rates with different banks and finan-cial institutions before apply-ing for a personal loan.Interest rates are the most ◗critical of all the costs that you pay. Therefore you should go for the cheapest option. Be-ware of banking terms like flat personal loan interest rates that appear to be cheaper but are in fact the most expensive.For example a seven per cent ◗flat rate would come out to an effective cost of around 13 per cent. Therefore it is better to choose a monthly reducing balance option than a half-yearly reducing option or flat-rate option. This means lower effective cost for the same stated interest rate. Interest-free loans are sometimes too good to be true but view them with suspicion.There will also be other costs ◗such as processing charges. You should ask for zero pro-cessing fees and zero-penalty for pre-payment option. If this is not available, then lowest cost would be better. Make sure you work out as to how much these other costs add up to. So even though the interest rate may be lower, it usually adds up to being expensive.Make sure that all deals and of- ◗fers agreed upon are supported by relevant papers. So make sure you always ask for a letter on the bank’s letterhead, men-tioning loan details like, exact rate of interest, processing fees, pre-payment charges along with interest schedule. Also before signing the docu-ments, make sure you recheck all the terms and conditions.Do ◗ not at any circumstance give any false information. This may amount to fraud and could land you in trouble. Do not sign any blank documents. Even if it takes you a few hours to fill up the form, please do so. Do not leave anything for the executive to fill up.Once you have received a ◗loan, do your best to pay it back as quickly as possible. Banks make their money off the interest they charge and the sooner you pay back a loan the less money you will have to pay in interest.

If you cannot pay back the loan for whatever reason, talk to your lender at the earliest opportunity. They will want to consider carefully your individual situation. If they reasonably believe your financial situation may improve, they may be prepared to suspend loan repayments for a while or extend the term of the loan. In the final instance, they can insist on the debt being repaid.

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