Personal Loans -How To Make Sure You Get The Best Deal 2022

Personal Loans:-

Britain is a country of debtors. It is estimated that 15 million people in the UK are struggling with personal debt. Despite these figures, we continue to borrow on loans and finance contracts, mainly because it is still very cheap.

Personal Loans – How To Make Sure You Get The Best Deal

Competitive Personal Loan Rates

Applying for a personal loan is now easier than ever as the internet has made personal loans more accessible. A quick glance online reveals that personal loan advertisements are everywhere. In fact, the competition among lenders is so fierce that many personal loans now come with additional benefits such as discounted interest rates, air miles, and even free insurance products to entice customers to opt for a particular loan. Huh.

Lending companies are easing their lending norms, opening up personal loans to people they might not have thought of five or ten years ago. Adding to the incentive for borrowers to apply for loans is the fact that base interest rates have remained relatively stable over the years and are unlikely to rise dramatically in the next year or so. Overall, this combination of factors has boosted the personal loan market, pushing the country’s total debt past the £1 trillion mark for the first time in history.

Options in the personal loan market

While taking a personal loan, borrowers face a lot of offers from lenders. These personal loan offers are mainly divided into two categories – unsecured loans and secured loans.

Unsecured personal loan products are available for homeowners, renters, and people living with their parents. Borrowers can usually apply for loans between £1000 and £25000 without the need to provide any collateral for the loan. Fixed interest rates as low as 5.7% are currently available on some loans, however, the rates are usually subject to higher credit scores. For those with less than ideal credit scores, personal loans may offer higher APRs than advertised.

On the other hand, secured personal loan products are more under the jurisdiction of the homeowner. This is because personal loans require collateral, so if the borrower defaults on the personal loan, the lender can take over the borrower’s home to recover his loss. Secured loans of up to £100,000 are available from a number of lenders, with limits on how much can be borrowed by the equity of the homeowner’s property. Overall, secured loans have lower interest rates than unsecured loans.

Whichever type of personal loan you decide to take, you must have confidence in your ability to repay the loan. If you are unable to repay your personal loan then you will attract a bad credit rating which will make it very costly for you to get credit in the future. If you are the owner of the house, you can also lose your home.

Personal Loans – How To Make Sure You Get The Best Deal

If you need extra money quickly, your main options are to use a credit card or take a personal loan from a bank, building society, or specialist loan company. Credit cards can be useful for short-term loans, but for long-term loans, loans may seem like the best option. Whenever you enter into a loan or credit agreement, your potential lender will assess your personal situation and offer to lend you the required funds subject to repayment with additional interest.

Depending on the results of a financial health test (completed by the lender), you may be offered an average of up to £15,000 to pay back over a period of between 6 months and 10 years. The actual amount you can borrow and the interest rate will depend on your past credit record, the amount requested, the loan tenure, the purpose of the loan, whether the amount borrowed is secured or unsecured, and various approval terms. by the lender.

What is the difference between secured and unsecured loans?

An unsecured loan is one where the repayment of the loan is not bound by any additional guarantee other than the loan agreement. If you miss payments, you could damage your credit rating or be blacklisted, making it difficult to get a new credit card, a mortgage, additional loans, or interest-free deals at stores in the future. It is possible

A secured loan is one where you provide collateral that guarantees you the repayment of the loan in case of unforeseen problems. This type of loan is usually secured on your home, which means that if you cannot meet the repayment schedule, you may have to sell your home to pay off the loan. Secured loans are generally viewed by lenders as low risk, as they can recover their money if something goes wrong. This means that the amount that can be borrowed is usually higher and the rates offered are often much better than the rates obtained on unsecured loans.

One thing to note is that rates can vary greatly. On an unsecured loan of £5,000 repayable over two years with no adverse credit history, the financial comparison site MoneyNet reported a different annual percentage rate (APR). provided results. 5.5% to 15.9% which would make a difference of £525.36 over the life of the loan. Don’t just accept the first loan you see.

Another thing to keep in mind when looking for any financial product is to make sure that you are doing similar-to-similar comparisons. Different lenders calculate the annual percentage rate (APR) in different ways. Don’t just look at monthly interest rates – they’re often lower than annual rates and can make you think you’re getting a much better deal than you actually are.

Be sure to check all the loan details and small print before entering into any kind of financial agreement so that you understand exactly what you need and whether the loan meets your needs. Remember that in general, the shorter the repayment period, the less interest you have to pay. But according to IntelligentFinance, more than a third of the UK adult population is unaware that 75% of personal lenders impose penalties on borrowers who want to pay off their loans early. This could prove to be a costly surprise and IF estimates it is currently costing customers around £336m a year.

If you are turned down for a loan by a bank or building society, it is helpful to know that they are obliged to explain why. Whenever you are denied you should check your credit history to make sure there are no mistakes and you can request that a rectification notice be given to prevent this from happening in the future.

The most important factors in looking for a loan are:

  • Decide on your loan requirements
  • Compare as many products as possible
  • read the small print
  • Choose if you are happy with the terms offered
  • Make sure you can pay
  • Apply only one application at a time.

Personal Loans – The Reasons And Effects

More and more people are deciding to take a loan. Statistics show that the level of personal debt is increasing at the highest rate in the world. This is happening because more and more people are asking themselves, should you wait for the things you want when you can get them now and pay for them later?

This not only leads to economic development but also gives more options to the people. This is also a concern for some people who are afraid that consumers will not be able to afford the huge amount of debt that they are taking, and this is one of the big reasons why the government is worried about the state of the economy, that we just Living beyond our means and continuing to borrow.

What lends us?

Factors that prompt people to borrow more are generally recognized as rising home prices and an expected increase in income. Many people are confident enough to continue taking out loans because they know that these loans are backed by the increasing value of their homes. It is also secured against debt. This type of loan is very safe from the point of view of the lenders, whose loans are completely secured, and also the borrowers, who can get very attractive terms and low-interest rates on their credit as it is very secure.

What if the price of my house goes down?

However, since most of the loans are secured at home, it creates a fragile financial environment for our loans. Although events are unlikely to occur, a drop in home prices can leave many homeowners who have put their loans against their properties into financial trouble. Banks or lending institutions are less likely to discuss defaults, panic, and then call in loans against defaulters than when the economy was vibrant.

Borrow for the future

Other factors that allow consumers to continue to borrow are their age, optimism, and future prospects. The population has a young and well-educated workforce, many of whom have a bright future. Banks are willing to lend to universities and young professionals on an unsecured basis as they keep these borrowers on future earnings. The logic is that as their income increases, these borrowers can afford more debt.

On another note, it is a good banking policy to keep these ‘educated’ customers happy and start lifelong banking, financial institutions not only make profits with the original loan but also gain lifelong banking loyalty of the customer. Huh.

Effects and Benefits of Personal Loans

Therefore, these loans seem to benefit both lenders and borrowers. Lenders are happy because they have a good supply of borrowers who have a good chance of repayment. From the borrower’s point of view, the loan allows them to invest now, which they can afford later. This allows them to take advantage of the higher incomes and higher home values ​​they are experiencing.

The evidence that most of these loans are going towards home improvement, further education, and starting a business shows that the majority of what is being borrowed is being invested wisely. So, in many cases, it makes sense to take advantage of the cheap credit available now and use it to invest in the future, but the overriding factor is a caution!


All information contained in this article is for general information purposes only and should not be construed as advice under the Financial Services Act 1986.

You are strongly advised to seek appropriate professional and legal advice before entering into any binding contract.

Personal Loans FAQ:-

Who is the easiest to get a personal loan?

The easiest banks to get a personal loan from are the USA and Wells Fargo. USAA does not publish a minimum credit score requirement, but their website indicates that they do consider people with scores below a reasonable credit limit (below 640). So even a person with bad credit may be able to qualify.

What is the best way to get approved for a personal loan?

How to get a personal loan
Check your credit score.
Take steps to improve your score by checking for errors and paying off debt.
Determine how much you want to borrow.
Use lender prequalification to shop everywhere for competitive rates.
Submit a formal loan application.

What will be the loan monthly payment of 50000?

Monthly payments on a $50,000 loan range from $683 to $5,023, depending on the APR and how long the loan lasts. For example, if you take out a $50,000 loan for one year with an APR of 36%, your monthly payment would be $5,023.

Is it easy to get approval for a personal loan?

If you have a flexible credit score and income requirements, getting a personal loan is easy. While the best personal lenders often have high credit score requirements, typically between 600 and 680, some accept scores as low as 560 – such as the ones on this list.

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