Things to consider when applying for UK loans
When purchasing anything from a car to a new pair of shoes, reassuring yourself before making a decision is a key part of the process. Reassurance provides confidence, and that’s why we’ve put together a quick tick list to follow before you apply for any UK loans.
1. Work Out How Much You Need To Borrow
Working this out can sometimes prove a much more difficult task than initially considered. This will depend on affordability and what you want to use the money for.
Calculating the full costs of what you need the loan for is always a good start to the process. First, establish a clear figure you want to borrow and stick to it, it’s always tempting to borrow more than you need. Try to add some sort of savings to top up your loan, this could really give you an advantage of reducing the value you owe.
2. Study All Options
When you’re in need of some extra funds it can be difficult to get your hands on it quickly. A lot of people turn to short-term UK loans as it’s one of the swiftest options to give you that immediate financial support. That being said, you can find plenty of other options which might better suit your needs.
- Credit cards
- Personal loans (high street/ online)
- Peer to peer loans
- Short term loans
- Store cards
3. Be Aware Of Your Credit Score
UK loans lenders will always check your credit report when assessing your application. Your credit report will provide certain information, lenders will check to see how much money you qualify for and at what interest rate. We would advise that you have a good scan through your report, you will then know where you’re up to before you get started.
Something affecting your score? – If you’re not sure why this is contact the company in question to try and rectify it. It’s easy to investigate your report, you can do this with any credit score agency.
4. Compare UK Loans
Try a Loan Brokering Service – taking advantage of a free broker service is a savvy way to check any online loans. You can save yourself time by using a quick search tool. This provides a multiple lender search under one roof for most loan types. If you do choose to use this facility make sure you study their website, don’t be tricked by an unregulated broker.
Using this method won’t affect your credit score multiple times, the application form conducts a soft search by assessing affordability. All the information you provide from the application form is then placed with a group of lenders with the hope to guarantee you a loan.
The majority of these lenders assess approval by affordability, this is great for anyone needing assistance with bad credit.
Stay away from filling out multiple application forms with lenders, this will usually show up on your credit report. This could result in a negative impact to your credit availability and to other lenders.
Most brokers offer instant decisions and no credit checks when searching for any UK loans. So, you won’t have to wait around to know if you’ve been approved or not.
Try a Comparison Website
This is another way of saving time as a comparison website will list a number of loan lenders and their interest rates.
Multiple options are better than one, as they say. However, if you need a short-term loan you might be better looking elsewhere as comparison sites usually start at a loan term of 12 months. Also to add – interest rates can be high with the approval likability decreasing the lower the interest rates are.
If you are looking for a personal loan comparison you can find some reasonable rates. You choose the lender that fits your circumstances then usually you need to fill out another application form. The majority of these lenders will only approve on a good credit score.
5. Interest & APR
Interest rates are boring to look at, especially when you are searching many different amounts/rates. However, it’s vital that you do some digging so you don’t over pay. Your proposed rate will determine how much you pay on top of what you owe.
APR stands for Annual Percentage Rate. This is a calculated cost over a 12 month period for your loan (how much the loan costs annually). APR accounts for interest plus potential charges (e.g. arrangement fees) on the loan. The reason APR is shown on all loan examples is to provide any customer the comparison tool to study different rates on the market.
Always look around for the best rates as they can change from lender to lender, depending on your circumstances and amount you wish to borrow.
6. Check Affordability
Once you’ve found a loan that suits you, it’s important to calculate the repayments. Work out exactly how much your in comings and outgoings are to understand your flexibility to pay it back.
Missed payments could lead to charges, meaning your loan becomes more costly. Any missed payments will usually affect your credit score, so if you want to apply for any UK loans or credit in the future make sure you pay on time.
7. Check The Small Print
Before you click that “I agree” text box make sure you understand all the T&C’s of your chosen loan provider. You will be able to see your potential lender’s charges, from repaying your loan early to how much a missed payment fee will be. The T&C’s will also advise you of other important information e.g. how long your cooling off period is (usually 14 days).
8. Still Unsure – Contact The Lender
If you’re unsure about anything to do with your loan you can always contact the lender directly. Make note of any email addresses or direct numbers to call and ask many questions as you need to.