Flexible Loans.

If you have a variable flow of income, then a flexible loan that allows you to pay off different amounts each month is finally now available. Ultimately, these products are not much different from a credit card with a higher credit limit. The benefit of these is that you should be able to pay off your loan early, saving a healthy amount in interest.

The details of your loan will be dependent on the amount that you request to borrow, your past credit history and your current credit rating. You can borrow money and pay back money within the loan facility up to an agreed credit limit. The loan facility is ongoing and has no fixed end date. Companies like Cahoot offer products like this - and you are likely to find that the interest rate you pay on the loan is around 8%.

Flexible loans are all about trust. The lender needs to trust you to behave appropriately with your loan facility, and eventually to pay it back. So the lender will carry out a credit score on you. This credit score will not only decide whether or not you get a loan, but also at what terms. For example, at Cahoot, they offer four different rates of interest - 7%, 8%, 9%, 11%, which correspond to different credit scores. The company deny that they are cherry picking customers, saying that it is a system that is similar to those used by all of the financial services providers. A flexible loan is a product for responsible customers, and they have to find those customers somehow.

However, it is very important that you read the rules of the loan carefully. Whatever the APR, there are also likely to be rules attached to the flexible loan. Should you step outside these rules, there could be some hefty charges apportioned to you, which could make the flexibility not worth it. So you have to make sure that you are disciplined and confident or you could find yourself in great difficulty.