Choosing the right loan

First you need to consider how much you want to borrow and for what period. Almost all lenders offer loans for up to five years, but if you want a longer repayment period you choice could be more limited. The longest loans tend to be secured ones.

Obtain a range of quotes. Some firms will give a better rate if you apply online rather than over the phone or in person at a branch so have a look at their websites too.

Think twice if a lender wants you to apply before giving you a quote - when you do so it will check your credit record and leave a footprint. Too many of these and lenders will think twice about offering you a loan.

When you get a quote check if it for just the loan or if it includes things such as arrangement fees or insurance, so you can be sure you are comparing like for like. If you might be able to repay the loan early, and thus save on the interest, look for a loan without early redemption penalties.

Lenders will often try to sell your payment protection insurance which will pay out if you are unable to work through sickness or unemployment. Having cover may put your mind at rest, but you it can also make the loan considerably more expensive.

A cheaper alternative to loan insurance bought from your lender is standalone accident, sickness and unemployment insurance, bought from a broker or online. This tends to have the same exclusions as a lender's insurance, but has a lower monthly cost.

Before signing on the dotted line for your loan, double check the terms and conditions. Are you absolutely clear about what the monthly repayments will be and any restrictions and penalties?