Consumers looking to get to grips with their finances over the next 12 months may wish to consider applying for a personal loan, one industry expert has suggested.
According to Julia Harris, mortgage analyst for Moneyfacts, numerous commentators are predicting that 2008 will be a "tough year in the personal finance world". This leads her to state that for those looking to get to grips with their spending in the coming year, "now is the time to get prepared for the rough ride ahead". One way in which many people could get their finances into a more manageable condition, Ms Harris suggested, was to apply for a low-cost personal loan to use as a means of debt consolidation.
One of the first things consumers are advised to do is sit down and draw up a list documenting how much money they owe, whether this is through loans, credit cards, overdrafts or cash owed to friends and family members. Although it was suggested that this can be the "hardest bit" for many people, as they are often unwilling to face up to all their financial difficulties, it says that it is an essential step in getting to grips with finances.
In addition, the Moneyfacts analyst advised Britons to write down all the demands on their money next to their income to help them identify how much they can put towards repaying debts and any areas in which they may be able to generate disposable income.
She said: "If you are paying high rates of interest on numerous credit cards and store cards and want to pay it off and be left with a more manageable single monthly repayment, then an unsecured personal loan could be the best route for you. The advantage of a personal loan is that you have an agreed interest rate and monthly repayment, both of which are fixed for the full duration of your loan agreement."
However, those who do take out a loan were advised to avoid being pushed into purchasing expensive insurance from their lender to protect repayments on their borrowing. Consequently, those considering covering their loan payments were urged to take the time to ensure that they get the best deal possible.
Meanwhile, upon getting a loan or other form of credit, borrowers should make sure they know how much interest they are paying and that they are getting the most competitive deal possible. Moneyfacts also urged people to be realistic about the level of debts that they can pay off and if they discover they are developing financial problems to seek out help from a professional advisory service.
For people struggling to get to grips with their money management as the new year progresses, a cheap personal loan may be of assistance. Last year, James Falla, director of debt consultancy Thomas Charles, suggested that many Britons are unaware of how much interest they are being charged on their borrowing. Such consumers, however, may find that a low-cost personal loan could be an effective means of reducing debts owed across a number of expensive credit and store cards.
