Are you considering taking out a loan? Personal Loans Now provides you with a handy guide on everything you need to take into account before you take out a loan, helping you to choose the best loan option for you.
- Learn who can apply for a personal loan, how to use an online loan calculator and what restrictions are in place
- Actions that can affect credit ratings. How to apply for a loan plus borrowing limits and how to find a reputable lender
How to Apply For A Personal Loan
Restrictions For Personal Loan Applicants
To apply for a personal loan in the UK , you must be over 18 years of age and a UK resident. In theory that is as basic as it gets. In truth, there are more qualifying factors. They affect whether or not you are accepted or turned down for a loan.
These factors include your income, credit history and payments records. During the early 2000s, the lenders admitted most applicants with fewer background checks on affordability. Following the credit crunch in 2008, lenders sought to tighten restrictions. Consequently, it is now it is harder to borrow money.
I Need a Loan. Am I Eligible?
The security of your employment is one factor that is taken into account when you take out a loan. If you do not have a secure job e.g. work only on a zero hours contract, it is more than likely that a lender will look unfavourably upon your application. Similarly, moving jobs and home addresses on a regular basis will alert a lender to the fact that approving a personal loan application might be too risky.
One of the simplest ways to check whether you are eligible for a loan with a low-interest rate is using an online calculator. Enter your details, the amount you want to borrow, the period of repayment and the purpose of the loan. Details about individual circumstances are also required. These will include a home address, length of time employed, marital status and residential status i.e. tenant or homeowner. Also, full information about income and monthly outgoings are needed. This quick and easy process will allow you to estimate the chances of approval before you make a formal application.
Finally, anyone applying for a loan will need a current bank account. This way, the funds can be deposited, and repayments can be deducted. As part of the approval process, a lender will want access to how the bank account has been conducted in the past. It will give them a good indication of how you deal with money.
Every application form must be signed. With the signature, you agree that a lender can access details about your credit record. Long term loan lenders will make sure that the whole process is smooth and hassle-free.
Credit Ratings For Loan Applicants
All lenders make use of credit reference agencies which hold details of any current or previous debts and records of late or missed payments. Each agency allocates a score to every person who has ever borrowed money. Those with the highest scores are deemed to be better prospects as borrowers and at less risk of defaulting. A low credit rating can make it harder to receive a loan. It can also affect the offered interest rate.
Anyone who makes multiple applications for a loan is going to have their credit rating affected. It is why we recommend you use an online loans calculator before you make an application. No doubt, it will help to maximise the chances of a successful loan application.
How Do I Apply For A Personal Loan?
Applying for a loan is relatively easy. Most lenders will take applications online or by post. If your chosen lender has a local high street branch, you can also apply in person. The major lenders in the UK all have loan calculators on their websites. You should use them and other information on the site to find out more about applying for a loan.
In the age of the Internet, the application process for best loans can be very fast. An online applicant may receive a reply with a few minutes. If the application receives initial approval, a credit agreement will be posted out along with a list of any documentation needed to complete the process.
When the signed agreement has been received and finally approved the funds will be deposited into a nominated bank account. Applicants who are unsuccessful will receive written confirmation giving some information. It will explain why the loan has been turned down.
How Much Can I Borrow On A Personal Loan?
The amount that you can borrow on a loan will not only depend upon the value that the lender offers (typically £1,000 to £15,000) but also on your personal circumstances. There is no one size fits all approach to lending or borrowing. A lender will look into the credit record of each applicant as well as their current financial circumstances. This allows the lender to come up with a final figure.
How Long Is The Term Of A Personal Loan?
There is no set term for a loan. It depends upon the amount borrowed and how much you can afford to pay each month. A longer period will make the monthly payment figure lower. However, the length of the term you will pay more interest. Therefore, the sensible option is to choose the lowest repayment term possible.
A Secured Or Unsecured Loan?
A secured loan requires some collateral. Typically, this could be a home or business. Secured personal loan rates offered for interest are lower because the risk to the lender is less. If you are completely confident that you can repay your loan whatever the circumstances that might arise, then this could be a good option.
Unsecured loan rates offer a higher rate of interest. However, these products do not mean that there is a risk of losing your home or business if you fail to make the full repayments on time.
People use loans for many purchases. Many are taken out to buy new cars, fund home extensions. You can even use a loan for a round the world trip. However, a word of warning. You should never take out a loan to fund your day to day lifestyle. It can be unwise to apply for loans for debt consolidation. Anyone who owes a significant amount of money would be wise to consult a debt counsellor before taking on, even more, monetary commitments.
Personal Loan Applications
Unlike the 1990’s, when most days the postman brought a wealth of invitations to take out mortgage equity release schemes, loans or credit cards, these days a potential borrower will often find that they have to actively seek a lender to take out a loan.
Despite the abundance of advertisements for these products, it is not always as simple as it sounds to find the best place to take out a loan.
One of the most informative places to look for details about personal loans is the Internet. You can find a list of lenders from one of the many money facts websites. You can compare offers from a host of different lenders on these websites. If you are searching for the best available loans, remember to look at;
- the terms and conditions
- the repayment period
- the interest rate
This is so that you can compare like for like.
Changes To The Way Lenders Do Business
In the not too distant past, it was mainly the five major high street banks which offered personal loans. Applicants often had to attend an interview before a request could be considered. However, times have changed, and now lenders have their own websites. Just by searching with Google you can find a list of local and national financial institutions that are offering to lend money.
Conclusion – Should I Take out a Loan
Applying for a loan involves meeting certain criteria. You can make an initial check to see whether you are eligible to apply by using an online loans calculator. Credit ratings can be affected by an application for a personal loan. Personal Loans Now discusses everything you need to consider before you take out a loan; borrowing limits; unsecured and secured loans and a warning about using loans for day to day living. Furthermore, there are a vast number of financial outlets where you can apply for a loan. Look on the Internet for information and advice about how to compare deals and where to make your application.