Looking for a loan?
Whether you are looking to consolidate your debts, buy a new car, start some home improvements or have something else in mind, why not shop around to make sure you get the best deal? There are a range of loans available but which is the right one for you? Here is a quick rundown to help you decide.
Unsecured Personal Loans
With an unsecured loan you do not have to put up any collateral in order to take one out- the lender doesn't need any type of guarantee that if you don't repay the loan as you promised they will be able to take something of equivalent value to cover any outstanding repayments.
Unsecured loans typically offer amounts up to £25,000 repaid over a number of years. With most unsecured loans the interest rate is fixed which means the rate will not suddenly jump halfway through a term, and as such you will be able to budget for your repayment amount as that will remain the same.
To get an unsecured loan you will need to complete an application that will check your credit file. The strength of your credit profile will impact not only whether you are accepted for the loan or not, but also how much you can borrow and what your Representative APR will be.
Peer to peer loans
Peer to peer loans are loans where the money is provided by individuals, rather than a financial institution. To the borrower, the loan is managed and repaid in the same way as a loan provided by a financial institution. Peer to peer loans are usually reserved for those with an excellent credit history.
What to consider before applying for a loan
It is important to do your homework before applying for a loan.
Consider how much you want to borrow and what monthly repayment you can afford. It may help to go through all of your incomings and outgoings to determine what sort of repayment suits you. You can reduce your monthly repayment by taking the loan over a longer period, but the trade-off for this is the longer the loan is outstanding, the more you will have to pay back in the long run.
Shop around to find the right loan that suits your needs. Some deals may only be available online or exclusively for existing customers, so check the terms before you apply. Also, consider if there are any additional features that you would find useful, such as payment holidays or no early redemption charges. Lastly check how you can manage your loan, and, if you are accepted, ensure the date any repayment is taken fits your schedule- I.e. it is taken after you have been paid each month. The lender may also ask you to provide proof of your earnings or address as part of your application.