At some point in your life you will either want or need to borrow money. The amount may be small - to pay the telephone bill perhaps - or large - possibly to buy a new car. If you plan to spend beyond your everyday means, the first port of call will usually be your savings. But if your savings are running low, then you may need to borrow money from your bank or building society.

Usually the amount you want to borrow will decide the means you choose to do so. Your choice will be one of the following:

• Overdraft: Current account overdrafts allow you to borrow relatively small amounts interest free.
• Credit card: Useful for expenses up to around £1500. You will have an agreed credit limit and as long as you stay inside the limit and repay the amount borrowed in the set time, you'll incur no penalties. More on credit cards...
• Personal loan: You can borrow more with a personal loan than with a credit card or overdraft - often up to £25,000. You repay the loan monthly at a fixed rate.
• Secured loan: Offering similar amounts to a personal loan and usually with lower monthly repayments, a secured loan uses your property as security for your borrowing. Interest is charged at the standard variable mortgage rate usually over the same term as your mortgage. This is probably the cheapest form of credit you can get.

Before you borrow any money, take a careful look at your finances. If you can use your savings to save you from borrowing then do so: you will always save yourself money in the long term. If you do need to borrow, you will need to decide on the amount and over what period you want to pay it back. If the amount is relatively small and you are confident you can pay it back quickly (within, say, a month or so), then consider an overdraft or a credit card: they are easy and quick to set up. If you need more, then you will need a loan.

Depending on your circumstances, you may be eligible for special rate loans. If you are a student, for example, you will be able to apply for an interest-free overdraft. If you are a recent graduate, you may be able to choose a preferential rate loan for a number of years after graduation.

Disability should not, provided you are able to make repayments, affect your ability to borrow money. When agreeing a credit card or loan, lenders will want to know about your credit history, your income and outgoings and your job. When you are supplying information about your income, be sure to include details of any benefits and grants you are receiving. Your application should be judged in the same way as any applicant. If you feel you have been unfairly treated, then the lender may be breaking the Disability Discrimination Act.

The only time health is considered is if you apply for certain kinds of loan protection or if you apply for credit card 'extras' like travel health insurance. Check with your bank or building society before borrowing.

• Agree an overdraft limit with your bank or building society in advance. Some accounts let you go into the red up to, say, £50 or £100 with no charge to you at all.
• If your balance falls below your agreed overdraft limit, you will start paying interest on the overdrawn sum. Interest rates vary, so be aware of the potential cost. On top of this interest, you may also have to pay a penalty fee. Your bank will also charge you for unpaid cheques and direct debits.
• Remember, if you organise an overdraft, BE CERTAIN TO STAY WITHIN YOUR LIMIT. If you don't, charges can be expensive. If you anticipate this happening, contact your lender in the first instance. If you're worried about managing your money, consider seeking debt advice.

• You can apply for credit cards at your bank or building society, over the phone or over the internet. Application forms can almost always be provided in Braille or large print.
• When your card arrives, you'll be given a credit limit - usually between £500 and £10,000. You can spend up to that credit limit without paying interest within a pre-decided time limit. When that time is up, you will have to start repaying the balance.
• Credit cards can offer the most flexible repayment options when borrowing money. It's up to you how much to repay and when you do it although most card issuers insist that you make a minimum monthly repayment (typically 5 per cent of the outstanding balance).
• You may be charged if you make a late payment or if you exceed your credit limit.
• If you don't clear the balance in the set time, interest will be charged on the money you owe. Remember to take this charge into account when planning your finances.
• Credit cards have protection schemes to safeguard the consumer when making purchases between £100 and £30,000.
• More on credit cards...

• Personal loans are generally used to fund large bulk purchases - like a new car, a holiday, a computer or home improvements.
• You can apply for loans at a bank, building society or credit company. Many are also accessible via the phone or internet. You will need to make an application, filling in details of income, outgoings, current credit cards, loans, mortgage situation and so on. You will not be issued with a loan unless the lender feels sure that you'll be able to pay it back within the chosen time.
• Personal loan rates are fixed for the period of the loan and, as a result, so are the monthly repayments. This means you know exactly how much you have to pay each month, when the loan will be repaid and the total interest charge.
• Some lenders allow you to take repayment holidays without penalty, though they'll still charge you interest during this time.
• If you think you might want to repay your loan early, then check that your lender will not penalise you.
• If you fail to meet your loan repayments you could find yourself in trouble. You should consider loan protection cover in case you become ill or have an accident during the period of repayment. It will add to your monthly repayments, but it could prove invaluable in the long term.

• Secured loans are often the cheapest form of credit available. They frequently have minimum limit stipulations (you might have to borrow more than £5000 for example).
• You use your property as security for your borrowing.
• Interest is usually charged at the standard variable mortgage rate over the same term as your mortgage.
• Because interest rates are variable your repayments are not fixed ? you could end up paying more than you expected.
• If you fail to make the repayments your house could be repossessed. Payment protection insurance is essential if you have any doubts about your ability to pay back the loan.

About us Our partners Terms & conditions Jobs at Youreable designed by