Overseas travel

You can afford that overseas trip after all

As winter sets in, it’s only natural to dream of chasing the sun by booking an overseas holiday. Unfortunately, the reality for most of us is that we just don’t have the savings to book on a whim. With the help of a personal loan, however, you might only need to dream a little longer. Here we discuss the dos and don’ts of a personal loan, so you can choose the best option for your financial situation.

Do: Shop around

As with most financial products, it can literally pay to shop around. When comparing between personal loans, consider the true cost of the loan to be the amount of interest payable across the lifetime of the loan, as well as any additional charges such as bank fees or penalties for missing repayments.

The true cost of a loan is not only reflected in the interest rate. High establishment and ongoing fees are often not advertised as clearly as the interest rate and can greatly affect the cost of having the loan. It is important to review and compare comparison rates. All credit providers must provide a comparison rate for their personal loans. The comparison rate combines the interest rate and all applicable fees, helping you get a truer indication on the actual cost of a loan. It’s not uncommon for some credit providers to advertise a lower APR, without advertising their higher fees, so be sure to do your research.

Do: Understand the difference between a variable or fixed personal loan

When choosing a personal loan there are two important questions you will ask yourself. First: fixed or variable?

While a fixed rate personal loan offers you peace of mind with set repayments and safeguards you against rate rises, some providers will charge you additional fees should you wish to make extra repayments to shorten the length of your loan. Rest assured, however, for those of you choosing a fixed rate loan, at Beyond Bank we don’t believe you should be penalised for paying out your loan early.

Alternatively, if you believe you can make substantial additional repayments, especially while the rates are low, choosing a variable rate personal loan could be a financially sound choice.

Do: Consider a secured loan

The second most important question: secured or unsecured?

Secured loans are available if you can offer an asset as security for the loan. These can be high-priced items, such as a car. Secured loans will generally have a lower interest rate than unsecured loans, however be aware that when providing security on a loan, if you are unable to make the repayments, the credit provider has the right to sell the asset to repay the loan.

Unsecured loans means your provider will scrutinise your credit worthiness and ability to make the repayments, so ensure you know what will make you an attractive personal loan customer.

Don’t: Rule out other forms of credit

Comparing across financial products is also a worthwhile avenue to ensure a personal loan is the best option for your situation. For fast funds, you often only have access to two options: a personal loan or a credit card. Take the time to assess how these two types of credit could work for you.

We think you’ve earned a holiday away, so let us help you take your first steps towards finding a credit option which suits you.

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