Choosing a Loan
If you are thinking about a loan, it is important that you make sure that you get the best loan deal for your circumstances. Choosing the wrong type of loan could prove a very costly error!
Loan Application are here to help you make choosing a loan as simple as possible. We have an expert panel of advisors who are committed in finding you the right financial product for your circumstances.
How to Choose a Loan:
When choosing a loan, there are a number of things which you may wish to consider, including:
1: Secured or Unsecured Loan? – This should be one of the first questions that you ask yourself when choosing a loan, and consider questions such as: How much you are looking to borrow and for how long? Can you afford the loan repayments? Will you pay off the loan early? How good is your credit history?
It is important to understand the differences between a secured and unsecured loan:
Secured Loans – Otherwise know as a home owner loan. You will have to offer the lender a form of security against the loan amount, most often your home. Therefore missing loan repayments means that your home is at risk of repossession.
If you decide that a secured loan is the best loan option for you, then it is likely that your main concern will be what the interest rate will be, as, typically, a lower interest rate means that you should repay less.
You should pay closer attention to the typical rate (the rate offered to 66% of all successful applicants) as opposed to the headline rate which will only be available to those with a truly excellent credit rating.
Unsecured Loans – Otherwise know as a personal loan. These are suited to tenants and non-homeowners who are looking to raise additional funds. Again, one of the main factors that you should consider should be the interest rate.
You should think carefully about your choice and be aware of both the benefits and implications of each of these loan types. For example, a secured loan can often offer you a better rate of interest and you should find it easier to borrow larger amounts of money, even if you have a poor credit rating. But due to the added risk, you may prefer to take an unsecured loan.
2: Consider your credit rating – The current economic climate means that lenders are tightening their criteria more than ever, so you may find it increasingly harder to get your loan application accepted.
It is important that you check your credit rating before you start applying for a loan as there could be errors which are harming your credit score. Those with a poor credit rating may want to wait a while before applying for a loan and try to improve it in the meantime through taking simple measures, such as making debt repayments on time and registering on the electoral role.
3: Understand the terms and conditions – A loan of any kind is a big financial commitment to make so it is essential that understand your loan agreement. Keep an eye out for hidden fees which you may not have considered such as administration costs and the charges which would be added for a late payment.
4: Would you be better with a loan alternative? – You may be choosing a loan to consolidate your existing debt and, if this is the case, you should consider if you would be better off with a loan alternative which allows you to reduce your monthly debt payments without getting into any further debt.
Whatever your personal circumstances, it is important that you seek professional advice about your loan application and to consider any loan alternatives. Contact Loan Application on 0800 980 4256 for further advice about choosing a loan which is right for you.
