Take a secured loan, but don't make it a habit

Words of advice

 ·        Think twice and consider the pros and cons. There is a lot of information in the internet and in financial  magazines that can help you decide. If you need further reassurance you can always contact a financial advisor.
·        Study the repayment options carefully before you apply. Understand the relationship between the loan amount, term and personal conditions, with the interest rate. Also check if early settlement costs apply.
·        Be sure you understand the way in which the interest rate is charged (i.e. fixed, variable, capped, discounted).
·        Remember that the longer it takes you to pay the higher the interest accrued.
·        Don’t forget that once you sign the secured loan agreement, you will be committed to the conditions you agreed to. If you fail to meet them you might loose your home or secured asset.
Nationwide Building Society today issues its first report on the personal loans market. The report is unique in so far as it is the only report of its kind to provide a clear focus on personal loans, as distinct from more general unsecured lending products, and excludes credit cards, overdrafts, store credit and car finance.
The report highlights that:

consumers are increasingly looking to a structured personal loan to reduce other debts; the growth in personal loans is now outpacing that of credit cards, although there are signs of easing ahead; 2.4 million personal loan agreements, totalling £13.5 billion, were entered into in the first quarter of 2005; most were for cars (30%*), home improvements incl. goods & furniture (24%) and debt consolidation (20%); the total balances outstanding on personal loans at the end of March 2005 was £93 billion; the average personal loan amount currently stands at £5,500.
Commenting on the figures, Stuart Bernau, executive director of Nationwide, said: "It appears that the personal loans market remains buoyant despite a gradual slowdown in other sectors of the economy. Whilst consumers are generally easing off from borrowing more and focussing on clearing existing credit commitments, personal loans appear to remain a popular vehicle for tidying up household finances in a relatively low cost and structured way."