Lenders these days like to make applying for a loan a simple matter but that doesn't mean you shouldn't be aware of a few facts; this information could be invaluable and save any mistakes being made. Whatever type of loan you are applying for, you should follow these basic rules to help you find the best deal. Firstly, you would do well to locate finance companies that you can apply to; make sure you obtain a good number of possible companies so you can get the very best loan possible.

To make things a little simpler, many comparison websites have been created which do all the hard work for you; as well as looking online, check out your high street banks and mortgage lenders for deals too. Nevertheless, this does not mean you should apply for a loan with as many as possible as a credit check is performed each time you do; each check carried out actually lowers your credit score so just ask for general information until you find the loan you want. When shopping for a loan, you should look past the promotional APR rates and terms, and ask the lender what the monthly repayments are; although it is beneficial to have a low rate, there are other factors to consider including repayment terms and additional (hidden) charges that are not always apparent.

If you are in a work environment where sick payments are not very good then insurance protection against injury or sickness is the answer; however, this can add quite a bit to the loan so check with you loan provider and other insurance companies to get a more competitive quote. Some employers will pay for sickness or injury for a considerable period so you may not require this section of the insurance because the idea is to only cover exactly what you need, which will keep the costs down. Whilst it might seem like a good idea at the time, resist the temptation to apply for a loan which is secured on your property; if your credit score is poor or it is for a large amount then you may need to.

Whilst the interest rates for unsecured loans are normally higher as the risk to the lender is greater, you will not need to use your home or other valuable item as collateral. Check and re-check the terms and conditions of your loan as sometimes clauses are hidden in the small print where they are easy to miss; some lenders place the most unfavorable clauses of the agreement in a place you might overlook. Look at what the consequences are if you miss payment or the payment is late, and if there are any additional penalties, such as charges for early repayment.

It is always wise to take out a loan for the shortest period possible unless there are special circumstances; more interest will be payable the longer the term of the loan. Of course, taking out a long-term loan for property is acceptable; for cars etc, depreciation sets in over the repayment term which if it is a long period means you are paying well over the odds for the item. Ensuring the monthly loan repayments are maintained without problems is important when you apply for a loan if you do not want to have problems later; it is also important to know the reason you are taking out the loan is to help with a genuine need.