Recommended personal loan providers for the UK Take payment breaks up to 3 months, 7.9 % typical apr
6.8 % most popular rate
6.8 % typical apr (variable)
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this list of company web sites offering a personal loan for a car at Fast Cash Today for a comparison of rates . Car LoansCar loans are self-explanatory and you will not need us to tell you what a car loan is about. However, there are car loans (or all purpose loans) that you can get that will provide you with a loan and no more. On the other hand, there are other car loans companies from whom you can purchase a car. This in itself can include benefits like break down cover, the car delivered to your door, collection or part exchanging of your old car. 1. Secured Loans although sometimes cheaper, carry a higher risk of causing
financial problems if you find yourself unable to pay for a period of time.
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What is a secured personal loan?
If you are a homeowner, then the secured personal loan is for you. They are a larger risk for the borrower, as your home is put up as collateral. If you fall into any difficulties repaying the loan, your home could be at risk. Thus, a secured loan should not be used if you have debt problems. Taking on debt to pay debt is not a good idea. You should start off your financial life by planning and budgeting very carefully so you can cover any loan payments. If you do that you won't overstretch yourself. Most people who run into debt problems do so precisely because they didn't plan their financial obligations carefully enough.So, why do people take out secured personal loans? Well, firstly you may want to borrow money in order to increase your home's value by making improvements to your home. Others may take on a debt consolidation loan, which means that you take on a large loan for a long period, which pays, off your other loans and credit cards and you end up paying a smaller monthly payment than you were paying with all of your other loans together.
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Secured loans offer lower interest rates, due to the lower risk that is being
taken on by the loan company. You can check this using a search and select application.
Use the same amount over the same time, then select both unsecured and secured
loans and compare the rates offered. You should find secured loans are cheaper.
If you default on your payments, you will find that loan providers will be a good deal more patient with you. Because they know that they have your home as collateral for the loan, they will give you more time to recover from whatever problems you are having that are making you late on your payments. This is not guaranteed though, so take the time to plan your payments and make sure that you can make them comfortably before you take the loan out.
The application process is a lot longer with secured loans than with unsecured loans, due to the fact that your loan provider will need to value your home. The cheaper rate that you should get can make this worth the wait.
However, it is easier for you to be approved for a secured loan. Because you are betting your home that you can make your repayments. It is very likely that your loan is far smaller than the value of your home, so the loan provider will like those odds, and see it as less risk. Financial product providers like less risk, and especially like shared risk.
What is an unsecured personal loan?
When you don't have to use any collateral to back a loan, then your loan is not secured on anything. If you do not own your own home, then an unsecured loan is your only option anyway. This makes the loan of less risk than a secured loan, as if you can't pay the monthly payments then you will not lose any of your possessions. But that doesn't make it all positive. Your loan provider will charge you extra interest on the loan than for the same loan on a secured basis. This is fair enough, as they are taking on more risk with lending to an unsecured borrower that the loan will not be paid back.On the plus side, your loan application would be processed quicker, meaning that you would be able to get hold of your money quicker. This is because your home doesn't need to be valued as part of your application. So, once you submit an application, you can expect a reply and a decision to be communicated very quickly.
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Don't think, though, that by taking out an unsecured loan you are ridding yourself
of all risks associated with borrowing money. If you default on your payments,
you can have court proceedings taken out against you. This can lead in the worst
case to your home having to be sold. The way that works is that if you can't
pay the loan provider back with money, the court can order something of yours
to be sold/ Depending on the amount outstanding on the loan, this could be your
home. So, you can turn an unsecured loan into a secured loan by defaulting on
your unsecured loan payments.
Because you don't have immediate security, you may find that the loan providers will be less patient with the fortunes of their investment. They're more likely to chase you aggressively should you be defaulting on payments. This means your credit record could be affected, which in turn lessens your ability to get any more loans or financial products.
Loan companies will check your credit record in order to get a credit score for you before they will give you any money. Your credit score is contributed to by your employment history, your accommodation history, and your repayment history with previous financial products.
It's all about striking a balance between getting quick access to funds and
being prepared to pay the extra that you are charged for the privilege. As long
as you are absolutely sure that you can make the repayments, secured loans are
cheaper.
What sort of loan is best for you? There are secured loans, unsecured loans, fixed rate loans, variable rate loans, capped rate loans, car loans, homeowner loans, consolidation loans, and more. What do you need the loan for?
Fixed Rate Loans
A fixed rate loan or mortgage, as the name suggests, is a loan where the rate
of interest is fixed for at least part of the loan period but not necessarily
the entire loan period. The advantage of this form of borrowing is that it means
the borrower and the lender will have a more accurate idea of how much will
be paid back by the borrower in the final analysis. Furthermore, as the interest
rate is fixed, it will not be affected by fluctuations in interest rates. Thus,
you will not benefit from reduced interest payments that would accompany a drop
in interest rates but you also wouldn't be required to pay more in the event
of interest rates going up. When the likelihood is that interest rates are set
to rise and remain at a high or higher level for some time then fixed rate loans
are likely to increase in popularity.
Variable Rate Loans
The opposite to a fixed rate loan could be considered to be a variable rate loan or mortgage. Variable rate loans tend to be cheaper than fixed rate loans at the outset as fixed rate loans have to factor in the probability of interest rates increasing. The interest you pay on a variable rate loan will normally vary with either the base rates of one or more high street clearing banks or the London Interbank Offered Rate (LIBOR). Variable rate loans tend to be more popular when the financial outlook suggest that interest rates are likely to drop and stay low for an extended period.
Capped Rate Loans
Capped rate loans and mortgages allow you to benefit from drops in the interest
rate but increases in interest rates above the level of the cap set will not affect
your repayments above the capped interest rate. As such, you benefit from drops
in the base interest rate but not from increases in the interest rate. Like fixed
rate loans, with a capped rate loan the rate of interest is not necessarily capped
for the entire loan period. Capped rate loans are most useful during periods when
interest rate fluctuations are frequent in number and great in magnitude. Personal Loans
A personal loan is simply a loan to an individual that can be for any number
things. A personal loan can be a secured or unsecured loan and is not always
dependent upon your credit standing. There are loans for people with adverse
credit as well as for those with good credit. Personal loans are still available
to people who may have, for example, defaults or a CCJ (county court judgement)
against them. However, personal loans for people with bad credit history tend
to be secured loans as a result of the perceived increase in risk.
Homeowner Loans
A form of personal loan is a homeowner loan. As inferred by the title, a homeowner
loan requires you to own you own home which the loan you get will be then secured
against. Homeowner loans tend to be easier to get provided that you have equity
in your property. For this reason, those with CCJs (county court judgements)
or arrears or poor credit history could find it easier to apply for homeowner
loans.
Payment Protection
When taking out loans or mortgages of any kind, it is often advisable to take
out payment protection. Payment protection insurance could prove essential if
your income should be interrupted for any number of reasons (e.g. illness, injury,
or unemployment). Payment protection insurance can then take over your monthly
payments for you until such a time that you can resume the monthly repayments
yourself. Payment protection can be offered by a lender at the same time as
the loan or can be obtained separately from a third party company.
Consolidation Loans
On the face of it, the idea of getting a loan to help manage your debts may
seem contradictory. However, a consolidation loan could prove the ideal way
to reduce your monthly outgoings to an amount that you can afford. You can get
a loan to payoff your other debts so that you are left with one debt, one interest
rate and one monthly repayment which is lower than your previous monthly repayments
combined.
Car Loans
Car loans are self-explanatory and you will not need us to tell you what a car
loan is about. However, there are car loans (or all purpose loans) that you
can get that will provide you with a loan and no more. On the other hand, there
are other car loans companies from whom you can purchase a car. This in itself
can include benefits like break down cover, the car delivered to your door,
collection or part exchanging of your old car. For this reason, you could think
of such car loans specialists in the same vain as you might any car dealership
because there may be additional benefits offered from different lenders that
you might find more appealing.
You should remember that if you do not keep up repayments on a secured loan
or mortgage then your home or other security is at risk
Being refused credit
How creditors decide whether or not to give credit
Lenders use a number of methods to decide whether or not to give credit. If you are told you cannot have credit you can apply again, either to the same company or another one. You have no right to be granted credit or to be given a reason why credit has not been granted, although some creditors may give this information.
Credit scoring
Points are awarded for such things as occupation, salary, marital status and area of residence. Credit is given if you score enough points. If you apply for credit, you must be told if this method has been used.
If your application has been refused, you can ask for the main reason for refusal and for the decision to be reviewed by the creditor. You should give the creditor any additional information that you think should be taken into account.
Credit reference agencies
A credit reference agency builds up information on your financial position from the electoral roll, county court judgments, bankruptcy details, and payment record in previous agreements. The payment record may include details of other people living at the same address, and their record may affect whether or not you are given credit.
If you have had your application for credit refused because of information on a credit reference agency’s records you can ask the creditor which credit reference agency it used. You can then get a copy of the record from the agency. You will have to pay a fee for this. You can ask for your record to be corrected if it is incorrect or misleading. If the record includes details of other people living at the same address, you can ask to be dissociated from them. You may also be able to ask to be assessed as a separate individual. There is, however, still no guarantee that credit will be given.The contact details of the main credit reference agencies are:-
- Don’t make the common mistake of looking only at the monthly payments
required under a credit agreement. Work out the total amount payable over
the term of the loan – bearing in mind that with some loans you may be
paying a variable interest rate.
- What seems like a good deal can have hidden costs. For example, reduced
monthly minimum payments or 'payment holidays' result in significantly larger
total payments. And store cards may seem like a convenient way to pay but
some of them charge a rate of interest of over 30% a year.
- Interest-free credit may seem like a good idea, but make sure you repay
the full amount before the free interest period expires.
- Even if you are only one day late, you may have to pay interest on the total
cost from the very moment you bought the goods.
- Think carefully whether you need the optional insurance to cover your payments
and make sure it really is suitable for you. This can be highly expensive,
add massively to your loan and may not be worth the paper it's written on.
- Extended warranties can be poor value. Research has shown that the cost
of a repair is likely to be less than the cost of an extended warranty. You
may also be covered under consumer protection legislation.
- Think twice before taking out a consolidation loan to manage other debts.
You may be able to arrange to pay back existing debts over a longer period
of time - at less cost and less risk than a new loan.
- Make sure you know the difference between secured and unsecured lending,
and don’t put your home at risk unnecessarily.
- Do your homework. Spend time shopping around, researching what’s on offer and getting advice - the internet can be a useful resource for this. You may think it will take too much time when you need a loan quickly, but if you skip this vital part of the process, you could be paying the price for years to come.
- If you can afford to pay for your goods outright, don't be persuaded to
take out credit unless it really does work out cheaper or
better meets your financial plans.
- Don't be intimidated by money matters. Take an interest in your finances
and keep track of how much money you have coming in, and how much you have
to set aside for essential bills. You can become well-informed by reading
money pages and listening to personal finance programmes.
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