Most of us find ourselves in need of finance from time to time, whether it is to purchase a home, buy a new car, treat ourselves to luxuries, or fund a special event. Often, such as with a mortgage or car loan, we need to take finance out over a long period of time in order to afford the repayments. However, there may also be instances where we wish to borrow a smaller amount of money for a shorter period of time, such as to pay for a holiday or fund emergencies. For those looking to take out credit for a shorter period of time there are a number of options available, each of which is suited to different needs and circumstances. Therefore you should try and stick to more suitable options where you will not be penalized for early repayment. This includes:

• 0% purchase credit cards
• Unsecured loans taken over a shorter period

Many people wish to take out finance to fund purchases at a special time, such as when going on holiday or at Christmas time. If you need to take out finance to fund purchases for a specified period then a 0% purchase credit card could be the answer. These cards offer a specified interest free period, which means that you can make purchases on the card and then spread the repayments over the specified period without having to pay any interest. The interest free periods offered can vary from one card provider to another, and some lenders will offer twelve months or more of interest free credit, giving you plenty of time to repay your balance. If, however, you wish to clear the balance earlier you can do so without penalty.

Unsecured loans

If you want to take out finance over a relatively short period and you have good credit then an unsecured loan could be the answer. Unsecured loans are generally available over a set term of between one and five years, although some lenders offer longer repayment terms of seven or ten years. However, unlike secured loans you will not usually be penalized for repaying the loan early, and therefore there is more flexibility available with unsecured loans. Depending on your financial and employment status you can usually borrow up to £25,000, but you will need to have a good credit rating to get one of these loans.

Unsecured loans are available from a number of lenders, such as high street banks and Internet lenders, and the rate of interest charged can vary from one lender to another. The recent credit crunch in the UK has seen the interest rates on some personal loans shoot up, so therefore it is advisable to compare a number of loans before you make your decision rather than assuming that your own bank is certain to offer the best rate.

Source :- thriftyscot.co.uk