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Personal loans have exploded in popularity over the last number of years. With UK consumers in more debt now than they ever have been in the past
personal loans are becoming even more popular as more and more people use the to consolidate their existing debts. There are a number of factors that have contributed to the growth of the personal loan market but most can be traced back to the following broad reasons:

ท A largely healthy economy with high levels of consumer optimism
ท Historically low interest rates
ท High rates of employment
ท High rate of house price increases leading to a wealth effect

While all of these have been reasons why people have been opting for more and more personal loans
they are not necessarily good reasons to take out extra credit and it is therefore necessary for each person
before agreeing to go further into debt to ask themselves the following question
is it a good idea for me now to take out a further personal loan?

While it is impossible to answer this question without knowing the precise personal circumstances of each person considering taking out a personal loan
there are certain guidelines that can be used to help you make up your mind. At the end of the day
the decision on whether or not to borrow more money will rest with you yourself and you should have a good perspective of the entire picture before making up your mind.

One thing that is a good help in deciding whether or not to take out a personal loan is simply to ask do you need the loan? This will depend on what you are considering using the loan for and how much you need to borrow. If you are buying a new car or a holiday you should be asking your self do you need the car or holiday? How long will it take you to save up to pay for it without taking a loan? Are there cheaper options or alternatives open to you that would mean you don’t have to take out the loan or that you could take out a loan for a smaller amount? While each individual case will rest on its own merits
it must be the case that a great many loans are taken out each year that are not really needed by the borrower.

Another question to ask yourself is how much will the loan cost and can you afford it? If the interest rates you are being quoted are very high
or if you are already finding it quite difficult to make ends meet
then you may wish to consider alternatives to taking out a loan.

Another aspect of considering a personal loan is to first choose which one suits you best
calculate the total interest to be repaid and go through the small print very carefully. Many loans carry early repayment redemption penalties; these are applied if you want to pay your loan off earlier than the agreed loan term.