Unsecured Low Cost Loans
Should you consider a flexible loan instead of a normal loan?
Many lenders offer unusual unsecured low cost loans, known as flexible loans. These loans work more like a credit card than a traditional loan, which means that you can reduce your repayments if you're feeling the financial pinch – or pay more when you're doing well.
Most unsecured low cost loans are standard repayment loans, which means that you pay the same amount every month until the entire loan has been repaid. However, many lenders also offer different kinds of unsecured low cost loans, called flexible loans.
Flexible loans are more like credit cards than traditional repayment loans: provided you make a minimum repayment each month, you can vary the amount you repay according to your personal circumstances. So you might want to pay the bare minimum when you've had an expensive month, but pay much more when you get a bonus in your wages. You can also borrow more during the life of the loan, which can be handy if you have unexpected expenses.
Flexible loans are certainly more convenient than standard unsecured low cost loans, but there are two things to watch out for: firstly they're usually – but not always - more expensive than repayment loans (and APRs can vary over the life of your loan); secondly, it's all too easy to run up a huge debt, pay off a little bit, and borrow some more. If you're disciplined they can be handy, but if you can't resist the temptation to keep borrowing then they're best avoided.
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