Best time to get a personal loan ?

Moneycantbuyyourhappiness

4.3% for a personal loan with the interest rate surely to go up next year. Is this the prefect time to get a loan? Obviously, the money needs to be invested wisely.

kinger101

Can you afford to pay it back if your "wise" investment loses say 50% of it's value?

CLAPTON

Moneycantbuyyourhappiness wrote: »

4.3% for a personal loan with the interest rate surely to go up next year. Is this the prefect time to get a 10k loan? Obviously, the 10k needs to be invested wisely.

no, it's better to save for things you want
and to gamble with your own money you can afford to lose

robatwork

There's a board specifically for loans where you may find the advice more positive.

However are you taking out a loan just for the sake of it, or for a non-essential?

kinger101

robatwork wrote: »

There's a board specifically for loans where you may find the advice more positive.

However are you taking out a loan just for the sake of it, or for a non-essential?

You missed OP's point. The loan is to be used as leverage for investments.

BillJones

Moneycantbuyyourhappiness wrote: »

4.3% for a personal loan with the interest rate surely to go up next year. Is this the prefect time to get a 10k loan? Obviously, the 10k needs to be invested wisely.

There aren't any legitimate investments that will guarantee you a return of greater than the rate at which you'll be taking out your loan.

May I ask, what investment are you looking at that claims to do so?

ChesterDog

Borrowing to invest is a recipe for doubling your problems and pushes even a very cautious investment strategy far along the risk spectrum.

Moneycantbuyyourhappiness

I can't remember a recent point in history when loans were as cheap as now. It's just calling for a opportunity to take one out, and invest it in somewhere you believe will make you profit.

e.g. Zopa (or any other peer to peer lending) pays interest above 5% and you'll get monthly repayment. Obviously, you will need a super credit rating to get 4.3%, so might not work for everyone. It seems like a good way to cash in if you have a good credit rating. It was just some random idea in my mind, I will probably find it incredibly difficult to resist spending the money once it sitting in the bank account :-)

innovate

I think you have completely inflated expectations of how much you can make from the likes of Zopa, how much money you would be able to borrow at 4.3%, and how much profit you could make bottom line with this cunning little plan.

I think you are also mis-informed that 4.3% is the cheapest in recent history you could get £10K for. Not too many years ago, I had more than this on 0% credit cards, and even today you can get such amounts, albeit with 3% or so balance transfer fees which makes stoozing a lot less attractive than it used to be just 6 or 7 years ago.

IronWolf

Well a 0.7% spread on say a 10k loan is £70. Is it really worth getting a 10k loan to make £70?

bowlhead99

IronWolf wrote: »

Well a 0.7% spread on say a 10k loan is £70. Is it really worth getting a 10k loan to make £70?

Particularly when you pay tax on the 5% interest income and don't get a tax deduction for the 4.3% interest cost... erm... nope!

Finance is generally pretty cheap. You can pay under 3% on a mortgage, or pay something like a one off fee of 3% for 2 years plus on a credit card balance transfer offer (unfortunately it's 3% on the whole balance rather than the declining balance of the debt, but still a good deal).

But while arbitrage opportunities have always existed (whether in exchange rates, interest rates, betting exchanges, share prices etc etc) you will find in practice the margin is usually too low to be particularly compelling. You need a stack of cash and a healthy appetite for risk, for it to work.

That is what banks do - pitch themselves as low risk to borrow at low prices and then lend on to higher risk people at higher prices. By the time they take out the fact that they absolutely have to pay back, but not everyone pays them back, and the cash is sometimes dormant in the vaults rather than actively on loan all the time, and the costs of administration - for you and I trying to be a bank, this would be the cost of our time that could be better spent in other pursuits - they don't actually make very large profits at the end of it as a percentage of the billions they get in and lend out.