If you read the press, or watch the evening News on a regular basis, you could be forgiven for thinking that in these gloomy times of economic  slow down and “credit crunch”, it is practically impossible to obtain any kind of funding for the things you need and want, especially if you are planning to apply for any type of personal loan.

But despite talk of global recession and there being no money in the financial markets to lend to individuals, personal loans still remain an extremely popular method of raising cash, even though lending criteria might be slightly more restrictive and interest rates may be slightly higher than a few months ago. Typically, the interest rate charged on an unsecured  loan has increased by 1% over the past six months, although the Bank of England has actually cut their headline rate by 0.75% over the same period.

When applying for a loan, it is extremely important to shop around for the best deal to suit your particular needs and circumstances, obtain a few quotes from lenders, or use one of the many price comparison websites which are available.

It can sometimes be beneficial to apply for a larger loan than originally required, as the rate of interest will usually decrease for bigger loan amounts. It could also be useful to consolidate existing debts within a new loan to reduce your overall monthly outgoings. However, you should proceed down this route with caution, if you borrow more, the total amount still needs to be repaid at some point and consolidating debts usually extends the term of the loan, which means interest is being charged for a longer period.

Another way to reduce the cost of a loan, if you own your own home, is to secure the loan against your property, either via a mortgage (which is the cheapest method), or a secured loan which takes out a second charge on your home after your mortgage (this is useful if there is a large redemption penalty on your mortgage).

Finally, don’t be deterred by all the negativity around at the moment, there are still plenty of good loan deals to be had and it can work out beneficial for an individuals personal circumstances. Just don’t apply for a loan for the sake of it; remember you still need to meet the monthly repayments.