If you are seeking credit in 2020, you need to know the best credit options currently available. Personal loans, installment loans and home loans remain some of the best financial solutions for many families.
Learn about these credit options here so you can fix the washing machine, buy a new car or get the keys to a new abode.
Demand for Credit Increasing
There was already an upward trend in the number of people seeking financial shelter through personal loans. In the UK, the BBC reported in 2018 that personal lending had increased four times faster than wages. This trend has continued and been identified in other countries and continents.
There is potential for an increase in credit demand after the COVID-19 outbreak. Peoples’ incomes are likely to be reduced for months and the economic repercussions may last years, meaning families could start investigating credit options to get through the difficult period.
So, What Are the Cheapest Loan Types?
Wonga has provided a useful in-depth breakdown of the three cheapest types of loans, namely personal, installment and home loans. In a nutshell, these cheapest loans can be explained as:
- Personal loans: Personal loans are usually a loan to pay for an item you cannot afford at that time. They may be used for anything you wish, from a luxury purchase to repairing a household appliance. They are usually paid back in one payment with interest.
- Installment loans: Personal loans are usually paid back in one payment, while installment loans allow the individual to repay the money over time with multiple repayments. Just like personal loans, the money can be used for lots of reasons.
- Home loans: The above two options differ from home loans because these loans are used for a specific reason. As you guessed, they are taken out to purchase a property. The creditor may repossess the home if repayments are not met.
Understanding Your Credit Score
Before applying for credit, you should understand more about your credit score and how it affects your chances of successfully applying for credit. This score tells creditors how well you manage money and is calculated on how well and timely you have paid back previous debt and how you have paid bills.
Applying for credit causes creditors to check your credit score, which simultaneously leaves a mark on your records. Therefore, it is better to understand how you are scoring before making an application if you are in doubt. But it is also essential that you do not take a scattergun approach and apply for multiple loans in a short period.
If you need help boosting your credit score before applying, check out these 10 tips from finance expert Martin Lewis. Some tactics may take a while to boost your score – but checking for errors on your file could make an immediate difference to your credit options in 2020 and beyond.