Taking out a personal loan can provide you with a vital lifeline when you need to cover essential costs at home. However, if you just take the first loan you come across, it’s unlikely you will get the best deal that you can. Here’s how you can find the ideal loan for your situation.
Check Your Credit Rating First
There are 3 main credit reference agencies in the UK that can provide you with your credit score. They are, Experian, Equifax, and Callcredit. Note that they might charge you a fee in order to access your record. However, it is worth doing this at least once so that you can be sure the information is accurate.
The better your credit score is, the easier you will find it to get a loan. There are a variety of factors that will affect your credit score, but as long as you have no debts and a clean financial history, there’s no reason that you should have a low credit score. Even if you are expecting your score to be low, that doesn’t mean that you won’t be able to take out a loan. For example, bad credit UK loans to those with low credit scores.
Look Beyond the Obvious Charges
When you see a loan advertised, you will see the interest given as representative APR. This is the rate of interest that the lender will offer to 51% of applicants. It doesn’t mean that that is the rate you will be paying. Usually, the headline number that you see in big, bold letters will apply to loans of a certain value that are being taken out by an ideal borrower.
It is therefore vital that you establish exactly how much you will be paying for the loan as early on as possible. Don’t make any final decisions on whether to take the money until you are 100% clear on how much you will need to pay over the course of the loan.
Whenever you are buying anything, it is a good idea to weigh up your options before you make a final purchasing decision, and this is just as true when you’re looking for a suitable loan. When you are comparing potential loan options, be sure to look beyond the numbers. They’re obviously important, but the general terms of the loan might put you off borrowing from a particular lender.
The representative APR is the number that lenders like to make the most prominent, but it is not particularly helpful to you. Remember, it only tells you what 51% of lenders who apply for a loan of a particular size who will be eligible for that rate. Find out exactly how much it is going to cost for you individually from each lender before you start comparing.
When you need money in a hurry, it can be tempting to jump on the first opportunity that comes your way. However, it is worth taking the time to consider your borrowing options and choosing a loan that suits your personal circumstances.