Are you currently thinking you could do with some extra funds? Whether they’re for some unexpected bills or even to fund a special occasion, personal loans could become your best, easiest option to help you through the difficult times.
What are personal loans?
A personal loan is an instalment loan that provides funds borrowers can use for any purpose. This could help cover unexpected expenses and more. Furthermore, personal loans are repaid in smaller, monthly instalments. This is to make it as easier for you to be able to repay the specific amount without worry and stress. All lenders will also charge you a certain amount for lending the money to you, expressed as APR. The APR also includes the interest rate. Interest is the amount you are charged for borrowing from a lender or the bank. This amount might change for different people. So, you should only use loan calculators as a guide if you come across one.
What can I use personal loans for?
You are able to use personal loans for whatever you want. Some common reasons to apply for a personal loan include home improvements, wedding loans, medical expenses and debt consolidation. Usually, they have a large lending range. So, they’re usually suitable for any situation whether it be bills that you didn’t expect or even a holiday you have dreamed of your whole life.
Applications are easy if you use the correct lender or broker. You should do your research when applying for a loan to make sure that the lender or broker is perfect and convenient for you. For example, using a lender or broker who has an online application process is better than using one who required an application in the post. This is because you will get your loan a lot faster (even the same day) as it is an instant application process.
Am I eligible?
It is not as simple as if you have a good credit history you will be approved. Lenders and brokers must take into account other aspects including your income, existing debt and late or missed payments. Although, this doesn’t stop you from applying as some lenders and broker take into account your personal situation too.
Most lenders have a similar criterion which tends to be similar to the following:
- Be over 18 years old & a UK resident
- Have a bank account and an active debit card
- Be in permanent employment or receiving various allowances
- Meet our credit and affordability criteria.
- Agree to provide accurate information about yourself and your financial situation
Although, this is just a guide as it is not the same for all lender and brokers.
What is the difference in an unsecured loan and a secured loan?
A common question which people want the answer to when considering a loan is: What is the difference in an unsecured and secured loan? The simple answer is the security of them.
Secured loans require collateral, which means they typically offer lower interest rates. If you’re unable to repay a secured loan, your collateral may be used to pay off the loan. For example, if you use your secured loan to buy a house, but are unable to repay the loan, you could lose your home. Whereas unsecured personal loans don’t require any collateral. They are just an agreement between the lender and the customer. Although, you should bear in mind that late repayments can cause serious money problems, visit the Money Advice Service for more information.
Perhaps a loan isn’t the best option for you and you believe you are able to save up a certain amount but need some extra help. Visit our post on saving here.