Whether it be an impromptu purchase or whether you are funding a necessary purchase here in the UK, you will be bombarded with companies who will willingly lend you money, at varying rates of interest. It is therefore important to do your homework so that you are aware of what is in fact on offer. You can find out more about loans through Everyday Loans.
Lenders will typically quote a representative APR rate. APR stands for Annual Percentage Rate and the lower the figure, the less interest you will pay. Be sure however to check with the lender first because although they quote a representative rate, this may not be the rate that they are prepared to offer you, that can vary according to your credit history and what they perceive as your reliability to pay back the loan so if you have defaulted in previous payments to lenders or you have any County Court Judgements against you or even if you have been applying to various agencies for credit around the same time or several times in the year, this will impact on your credit score and can affect the APR that you will be offered.
APR can also be influenced by the amount of loan, term of the loan and the popularity of the lender’s product, some APRs can be time limited so check, check, check. Check your own credit history, your check is known as a ‘soft check’ and will not impact on your credit rating. This will give you an idea of how attractive you will be to lenders. Be aware that some APRs can be huge, so look for a low number and make sure that you get a quote for the lifetime of the loan.
A secured loan is a loan which is linked to a physical item such as a car or a house and an unsecured loan can be for any purpose.
It is important to shop around and know which type of loan you are taking and understand the consequences for nonpayment, so make sure you can afford the payments. Google search and make sure that you don’t just look at the companies who are advertising in the headlines and don’t apply to several at once as each will run a credit check which will affect your score. You can use some of the comparison sites but remember in some cases, they will only show certain providers with whom they are affiliated so it is worth looking at several of them and making your own comparison.
The following options should be considered:
Banks, especially your own
Credit Unions can offer a good solution if you are a member
Peer-to-Peer Lending is also becoming increasingly popular and in some cases due to the lowered operating costs, the APR offered can be more favorable. P2P lenders only operate online.
Credit Cardscan offer 0% APR on balance transfers and on purchases for a limited period and you may also be able to take a cash advance, although this would be chargeable.
Online Loan companies can be expensive so remember to check the APR that they are prepared to offer you.
I would recommend avoiding PayDay loan companies as they tend to have the highest APRs in the industry. For those with a poor credit history, these lenders can offer what many think of as a solution but in fact, even small amounts borrowed can quickly become huge debts if not paid according to their terms.