Start off with banks and well known credit unions. When you begin looking for a personal loan, it's best to start with your current bank, building society or the larger, local credit unions. These institutions have solid reputations, so fraud will not be an issue. The downside is that their rates may be higher. A genuine rate comparison web site can help you there.



Then try the internet-based lenders. As their business is solely lending, you should be able to negotiate an even better rate.

If you have excellent credit then you should get a correspondingly good rate. This is not always the case. You see, a loan is like any other good you buy in a shop; the vendor may try to get you to buy a pricier product. In the case of loans, this means a higher interest rate, additional insurance, or fees. And maybe life or health insurance on top of that. He knows you'll likely not be 'shopping' with him again, so this may be his one-and-only chance to get as much out of you as possible.

Make sure that you are aware of the total costs involved, including the annualised percentage rate and any other fees attached to early repayment. When a loan is taken out, a contract is set up to grant the borrower a certain amount of money, if they submit to the terms and agree to pay back a sum over a specified period of time. Make sure you grasp and are content to pay all of the fees listed.

In the UK, if your credit is bad, or you get into trouble with your loans, get in touch with the CCCS: the Consumer Credit Counselling Service. They are a charity dedicated to helping people in a financial hole to get back on the straight and narrow. Other 'advisory' services you may find on the internet are just fronts for professionals looking to set you up with debt consolidation or a secured loan, or a remortgage, while charging their own fees on top.

This is dangerous, BUT, if your credit is not good enough, talk to friends and family and see if you can find someone with a good credit-rating to co-sign your personal loan. I say dangerous, because you could end up losing them as friends if you go into default, never mind the trouble you'd cause them. It's a fact of human nature that other people's problems are not as important as our own; would you be as scrupulous paying back a loan taken out by a friend, as you would if was totally your own?

TIP: Watch out for the 'Deal Of A Lifetime'; the deal that seems a bit too good to be true. If you see that a few lenders are quoting much lower than average, be cautious. If you are always going through to voicemail when your ring them, this indicates the level of service you are likely to get.

In case you ever have problems with your loan, inform your lender as soon as possible. The earlier you tell them, the more sympathetic they'll be to your plight. You can then make the necessary arrangements for under-repayments until you get back on your feet.