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Guide To Getting The Best UK Personal Loan [Part 1]



bank managerNot too long ago, applying for a personal loan in the UK meant that you needed to take yourself off to see your local bank or building society manager.  When you were there you would normally have an interview with the loan officer and, very possibly, the bank manager and assessment was made of the merits of lending you the money.  Rarely did the bank manager need to do a credit check – he was the credit check!  What’s more, it was even more rare if you could arrange to borrow the money from someone else if the bank manager turned you down.

Today all of these things have changed dramatically.  Now, unless you want to borrow millions, it’s highly unlikely that you’ll need to see a bank manager.  You can also borrow from lenders with whom you have no history.  In fact, you don’t even need to bank with them.  Indeed, borrowing in the UK in the past 10 years has become so easy you can do it in 5 minutes over the Internet! 

Unfortunately, however, the greater exposure to the different types of personal loans available has not made us better borrowers in Britain.  Many of us still apply for the wrong types of personal loan.  Most of us pay for too much in interest and charges.  And nearly all of us has borrowed more than we can afford to repay!  Which may all explain why, as a nation, Brits now owe well over one trillion pounds.

However, things don’t need to be this way.  Rather than having become more complicated, the personal loan industry in the UK has become much simpler.  All you need to do to get over any confusion you may have with UK personal loans is to have a quick read of our useful “Guide To Getting The Best UK Personal Loan”, which will hopefully answer any questions you may have

Where to start?

At first, applying for a personal loan may seem a little daunting.  There are several different types of personal loan, and you should try, as far as possible, to make sure you get the one that best fits your requirements for the personal loan in the first place.  To do this, you need to be thinking about:

-    why you need the personal loan, i.e. what is the personal loan going to be used for?
-    How much do you need to borrow?
-    what your chances are of being approved the loan?
-    what the interest rate and costs are going to be?

Today there are almost as many different types of personal loans as there are reasons for applying for one.  Having said that, the interest rate, costs and fees, term of the loan, and the amount you may borrow will normally all be inter-linked with the reason you need to apply for the loan.

For example, if you need a personal loan to buy a car or to pay for student expenses, then it is likely that you will be wanting to borrow more than £1,000 but less than £25,000.  On the other hand, if you want to apply for a personal loan because you have over spent this month and need some money quickly to pay for an unexpected bill, then it is likely you’ll want to be borrowing less than £1,000.  A third alternative may be that you want to borrow the money so that you can do some home repairs.  The home repairs may be fairly costly, such as building a new conservatory.  In this case you may want to borrow more than £25,000.  Under each of this three different scenarios you may be:

(i)    required to provide more evidence for the use of the loan
(ii)    charged different rates of interest   
(iii)    charged different fees and costs; and
(iv)    asked to provide security.

All of the above can be more easily understood if you consider each of these different types of loans as:

(1)    a Short-term Personal Loan
(2)    an Unsecured Personal Loan; and
(3)    a Secured Personal Loan.

We shall now at how each of these works in practice.

Short Term Personal Loans

Posted on: [ January 05, 2018 ]       Add to   Digg it   Add to Blinklist   Add to FUrl   StumbleUpon