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Flexible Loans and more Financial Freedom

By: Garry Crystal - Updated: 20 Nov 2010 | comments*Discuss
 
Flexible Loans And More Financial Freedom

If you are looking to borrow an amount of money but want the freedom to pay back as much as you want then flexible loans may be the best option. With flexible loans you are not stuck to a rigid repayment scheme, but interest will be applied from the day the loan is made.

What is a Flexible Loan?

The big selling point with flexible loans is that you can under or overpay during the lifetime of the loan. Flexible loans do give more financial freedom and have often been compared to overdrafts. If you feel like missing a payment then this is permitted, of you wish to pay back the loan early you can also do this without incurring charges. Flexible loans are usually a short term option, and the maximum length of the loan is around one year.

Pay More and Reduce Interest

Missing payments to flexible loans will not incur fees as this is how the loans functions; some payments can be missed and at other times you can pay more. The basic idea with a flexible loan is that you can make more payments and thus reduce the interest on the loan. If you have been overpaying on repayments you can also “borrow” the extra money back that you have paid in.

Disadvantages of Flexible Loans

If you are the type of borrower that will continually make low payments then this type of loan may not be a good option. Although there are no charges for missed payments the interest will soon mount up. In many cases this is the main reason a lender will offer a flexible loan. They are betting on the fact that the borrower will not pay the loan back early and they will make their money on the mounting interest fees.

Flexible loans have often been compared to continuous bank loans. The loans can last for a long time with a lot of interest fees if the lender continually misses payments. It is not a good idea to take a flexible loan if you are the type of borrower who will repeatedly underpay the loan.

Advantages of Flexible Loans

There is no doubt that flexible loans do guarantee a certain amount of financial freedom. The option to miss payments and make them up later is appealing. If budgets are tight then missing your loan payment for a month or two may be a great help. There is not usually an arrangement fee for a flexible loan, and of course there are no early repayment fees. If you can continually make large payments to the loan then you will save a lot in interest charges.

Suppliers of Flexible Loans

There are many high street lenders and internet lenders that will supply flexible loans. Always use comparison websites to make sure that you find the best interest rates. The lower the interest rates the better; and flexible loans can be either secured or unsecured. Secured flexible loans means that your property may be at risk but you should be able to receive very favourable interest rates, and you can receive more money. However, unsecured loans may mean more freedom as you do not have the pressure that comes with using your home as security.

With flexible loans you do have more freedom over your borrowing and the loan can be repaid as soon as you can afford to. Borrowers can receive up to £25,000 if their application is successful and interest will only last for the loan term. Pay back the loan early and you will have beat the lenders, and paid less in interest.

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