Buying
on credit can bring its own problems, but it can give you extra rights too.
Sometimes it's not always easy to get credit or the credit deals that are
available are less than generous.
It is as important to shop around for credit as for any other purchase. There's
no easy way out of debt, but the sooner you face up to the problem, the easier
it will be to solve.
Most people at some time will use credit to purchase goods or services, for
example, by obtaining a personal loan through a bank or building society,
hire purchase, or a credit agreement with a trader. Before buying anything
on credit you should consider the following points. Work out what the total
cost of the loan will be. Shop around for credit: how much will a loan cost
to repay each month and for how long? Check also the annual percentage rate
of charge (normally referred to as APR). Generally speaking, the lower the
APR the better the deal.
Some traders offer interest free credit (0%APR) but you will need to take
care that you are not paying higher amounts in other ways; for example, it
may be a higher cash price than you would pay for the same goods elsewhere.
Make absolutely sure you have read and understood all credit agreements before
signing them. If there is anything you do not understand, ask.
Make sure you can afford to pay back the loan and the interest - and still
have enough to cover all your other commitments. Check whether the loan has
a variable rate of interest. If it has, your repayments can go up as well
as down. Make sure you can really afford it. Some loans are only given if
they are secured on your home.
These are not available if you rent. A secured loan gives security to the
lender, not to you. If you cannot keep up with the repayments the lender can
sell your home to cover any loss. You might get a lower rate of interest with
a secured loan but you could have a lot at stake.
(Source : http://www.oft.gov.uk)
