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FOOL SCHOOL
Number 1
First of all, ask yourself the question do you really need to borrow all this money? Paying off debt is an expensive business and eats up part of your income that would be better employed investing for your future. It may seem to be stating the blindingly obvious but you want to borrow as little as possible. For example, do you really need to buy a new car every two years with all the trimmings? Would a quality second-hand car make more sense?
Number 2
Secondly, have you considered alternative options? If you have cash savings it may be better to use some of them instead. The interest you will lose on your savings is likely to be a lot less than those you pay on most loans. Perhaps you might be better off delaying the purchase for a few months and saving some more money instead.
A cash buffer in your savings account may be a useful emotional cushion but it may not be the most efficient use of your money. If you do dip into your savings leave money in tax-protected schemes like cash ISAs and TESSAs until last.
Another option is perhaps extending your mortgage, which is likely to be at a lower rate of interest. Or you could take advantage on the various flexible mortgages on offer if you find that you need take out loans for various purposes on a regular basis. If you go down this route you need to be certain that you can make the necessary repayments, as your house will be at risk. Adding to your mortgage does have one major disadvantage. You will tend to pay your debt off over a longer time period. One of the golden rules of debt is the quicker you pay it off, the better.
If you're a graduate, have you considered the option of a cheap graduate loan? Alternatively, you may be able get a cheap loan from your employer, particularly if you work in the financial services industry. Bear in mind you may need to refinance this loan if you move jobs.
Finally, many people are tempted to go to family or friends. On the face of it this may seem like a good idea as often no interest is charged. But what happens if you cannot meet your debts? Think very carefully before taking this route. Obviously for a short-term loan, where you are much more certain of paying the balance in full, it makes more sense. For short-terms loans you might also consider a bank overdraft or even a low interest rate credit card.