The monthly cost of a loan will depend on how much the loan is for, how long you agree to repay it over, the agreed interest and any additional charges that may be included. However, you should only take out a loan that you can afford.
A simple way to do this is: calculate your monthly outgoings (rent, bills, travel costs, food etc.) then subtract that from your monthly income. Is the remainder enough to cover the loan’s monthly payment?
Most loan companies will issue additional charges if you miss any monthly payments. Make sure that you know in advance what the worst-case scenario could be. Mainly so that you know to avoid it!
Always ask if there are any additional charges so that when you come to confirm your loan, there are no nasty surprises. Also, once you have signed up for the loan, some lenders charge a fee to make extra payments or impose a fee if you pay the loan off early. It is good to know these things sooner rather than later!
The amount you will pay back over the period of a loan will obviously be more than you initially borrow. Ask what the exact repayable amount will be upfront before you apply so that you have all the information you need to help make your decision.
The total amount you pay will be greatly influenced by the period of the loan so make sure that the loan term is of a length that you can manage and afford. In brief, the shorter the term, the lower overall repayment but the higher the monthly payment.
If you’re thinking about applying for a loan then don’t just jump right in - read this first and take some time to really consider if it’s the best choice for you.