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7 solid tips and tricks you can use to find the most acceptable Loans in the UK
People apply for loans to meet various financial needs and purposes. There are those who take out loans to cover major expenses like purchasing a brand new car and there are those who take them out for home improvement projects or settle credit card balances. There is a wide assortment of loans available in the UK’s lending market, so how will you know which ones are acceptable?
Simply put, the most acceptable loans are those that can easily satisfy your personal needs and circumstances. While this basically means that there is no such thing as a universally acceptable loan as every borrower’s needs and circumstances are unique, there are some proven tips and tricks that you can use to find the ideal loan for you. Here’s what you need to know:
1.) Compare the available options carefully
So you can find the most acceptable loans available for you, shopping around and comparing the different prices on as much offers that you can qualify for will help a lot. Interest rate is a good indicator of how expensive a loan deal would be but it would be better to focus your attention on APR or Annual Percentage Rate as it provides a more accurate description of a loan’s overall cost. This because the APR covers the interest rate of a loan and all the other fees attached to it as well. You can also use a loan calculator, which you can normally use for free in a lender’s website, to determine what the total cost of a potential loan deal would be.
2.) Determine if you are qualified
Now it would simply be a waste of time and energy to apply for acceptable loans that you are not qualified for in the first place. With that being said, make sure that you check what the eligibility criteria are for the financial product that you intend to apply.
Some of the best loans with the most affordable rates and favourable terms in the market for instance, are only available to existing customers. While you can still become qualified even if you are a new applicant, you may not be able to access the maximum amount and the lowest rate.
3.) Consider advance payment options
The option to make advance payments is something that you need to take into account when you are shopping for acceptable loans as it can potentially reduce the amount of interest rate payments that you will need to cover. There are plenty of lenders that allow this kind of payment feature but some will charge you for its use. You might want to look for a loan agreement that allows early payments free of charge if you intend to clear your debt in advance.
4.) Know your credit score
If you want to access the most acceptable rates and terms for unsecured loans (financial products that do not require collateral), then you will need to have a stellar credit rating first. The absence of security in an unsecured loan agreement means that there is plenty of risk in the part of the lender as there is no collateral that they can seize and sell if you won’t pay back the money that you borrowed. If you have a low credit score, this means that you had problems paying off debt in the past which automatically makes you a risky borrower that lender’s will not want to invest their money in. In contrast, an excellent credit score reflects a positive history of using credit which gives lenders the confidence they need to approve an unsecured loan application.
For this reason, it’s worth checking your credit score first so you will know which types of acceptable loans are available for you. If your credit score is not that good, you can consider secured loans like logbook loans or loans for bad credit as alternatives. Bear in mind however, that loans for bad credit generally come with high interest rates and this is something that you might want to consider before applying for the types of funding.
5.) Take out a bigger amount
Generally speaking, the bigger the amount that you borrow the lower the interest will be. In fact, the difference in interest rate that you can obtain from certain loans can be pretty significant if you increase the amount that you borrow by just several hundred pounds.
For instance, there are £7,000 loans for 7 years in the market that feature 14% APR. However, if you put an additional £500 in the amount that you borrow, the APR plummets to 6%. If you do the math, a 7% decrease in interest rate will surely save you a lot of money and this is made possible by simply raising the amount of loan that you want to take out by £500.
6.) Avoid making numerous applications
Every loan application that you make will be recorded in your credit file and multiple applications in a short span of time can leave a negative impression – you will appear desperate and financially troubled. In effect, you will be deemed as a “risky” borrower by lenders and this can negatively affect your chances of becoming approved for numerous types of acceptable loans.
As much as possible, limit your application on the best loans and credit options that you can easily qualify for. Also, make sure to borrow only what you need and the loan amount that you apply for must be something that you can genuinely afford based on your current monthly earnings and outgoings so you can enjoy the best chances of approval.
7.) Consider secured loans only if you know the risks
The best acceptable loans in the UK that provide the lowest interest rates and most ideal terms are generally those that are secured. But before you consider the forms of borrowing however, be sure that you know what the risks are.
Secured loan agreements are tied on a borrower’s asset like his/her a house or car. The asset will serve as collateral which means that if you default from your loan and don’t pay back the money that you borrowed, the lender has the legal right to seize the collateral as an alternative payment. With that being said, consider secured loans only if you are completely sure that you can keep up with the repayments according to set terms and conditions.