Doorstep Loans Result

A Guide To Doorstep Loans

Sometimes, you may need some extra cash to handle a financial emergency. Perhaps an unexpected expense has come up, such as a car repair or dental bill. Finding quick and easy cash loans for a reasonable interest rate is not always easy, especially for those who have bad credit. Doorstep loans are a new type of loan that are becoming very popular with consumers who need cash fast.

What Is A Doorstep Loan?

A doorstep loan is a type of loan that is provided to you by a lender who comes to your home. These loans are normally for small sums of money, starting at £50 and may go up to £1,000 at most. The loans are given for a short period of time, such as a year, with the repayments being collected on a weekly or fortnightly basis. The lender will actually come to your home to collect the repayments.

How Do These Loans Compare To Other Types of Loans?

Doorstep loans tend to have a much higher interest rate than regular bank loans or credit cards. For example, if you borrowed £200 from a doorstep lender, you would likely pay a higher interest rate than if you had borrowed the money on your credit card which charged a higher than average interest rate.

Secured loans offered by a traditional lender require that you offer collateral for the loan, while no collateral is required for doorstep loans. With unsecured loans, you do not need to offer collateral but the interest may still be higher than a secured loan (but lower than the interest on a doorstep loan.)

Pre paid credit cards are different from doorstep loans because with a pre paid card, you can simply add on the amount of funds that you choose before using the card, whereas with a doorstep loan the lender will simply give you the amount of money you want without prepaying anything.

Are Doorstep Loans Regulated By the Government?

All credit lenders must be authorised by the Financial Conduct Authority (FCA) before they can offer loans. If a lender is not regulated by the FCA, they are acting illegally and can be fined or imprisoned. This will provide some comfort to consumers to know that doorstep lenders are subject to oversight by the Government. The FCA will carefully examine a doorstep lender and their operations to ensure that their activities are legitimate and not merely a scam.

You can check if a person or company is registered with the FCA by searching the FCA register here.

What Should I Do If I’m Approached By A Doorstep Lender?

Doorstep lenders sometimes generate business by going from door to door, similar to a salesman, offering prospective customers information about their products and services. If someone comes to your door offering to lend you money, the first thing you should do is ask to see some proof that they have permission by the FCA to offer loans. If they can’t provide this proof, they are likely to be a loan shark.

You should end the conversation right away and report them to the FCA. Legally, lenders should not come to your home uninvited to offer you a loan. They must have written permission to visit your home. This also applies if you already have a loan and the lender offers you another loan while visiting you to collect repayments. They must arrange a separate visit for discussing the details of a new loan before signing you up.

This gives you some time to change your mind about the loan without feeling pressured by the lender. In addition, if the lender does visit you on a separate occasion to offer a new loan, you are allowed to change your mind and ask them to leave at any time. Ultimately, it is up to you whether or not you decide to take a new loan.

I Submitted An Application For A Loan. Am I Obligated To Take It?

No, you are not obligated to take the loan. Submitting an application is merely stating that you wish for the lender to consider and approve the application, and to contact you to discuss your loan options. During this time, you are free to ask questions if you are unsure about anything.

You may withdraw your request for a loan if you decide that you are not comfortable with it. However, if you are ready to proceed with the loan, you must officially agree to the terms of the loan with the lender. You then become obligated to repay whatever money you borrowed along with the agreed interest.

When Will the Lender Come To Collect Repayments?

The lender will come to your home to collect the repayments at a mutually agreed time that is convenient for you. When finalising the loan, you can arrange a time with your lender to collect the weekly or biweekly repayments. If you need to change the date or time of the payment collection you can do this by contacting the lender. As mentioned, the lender cannot come to your home unless you have given them permission to do so.

What Happens If I Miss A Payment?

You should carefully read the terms of your loan agreement to ascertain whether there is a late fee or penalty for missing a repayment. In most cases, you will not be charged for missing a repayment, but you should contact the lender to discuss how you can avoid missed payments in the future. If you are missing payments frequently, the lender will discuss your account history with you and try to work out a solution for paying back the debt.

Financial Help

While you may be tempted to accept an offer from a doorstep lender, you should think it through carefully first. You may feel frustrated because you have bills that you can’t pay, but don’t rush into a decision. Remember that borrowing money at a high rate of interest may add to your financial problems. If you are struggling to pay bills or meet your financial commitments, get help from a debt advice service.

The National Debtline is a free telephone helpline that aims to help people who have debt problems. It is open to anyone living in England, Wales or Scotland. This is a free and confidential service that may help you get out of debt. The number is 0808 808 4000. Alternatively you can reach them online at nationaldebtline.org

The Money Advice Service is an independent service created by the government to help people manage their money better. They provide free, unbiased advice about credits cards, loans and how to handle debt. You can reach them at 0300 500 5000 or through their website at moneyadviceservice.org.uk.

Conclusion

Only you can decide is a doorstep loan is right for you. If you are feeling financially strained, don’t rush into a decision or take out a loan in haste. You need to know what all of your options are. Do your research and make sure that you are fully informed about the terms of the loan before signing a contract. If you have any doubts about a lender, contact the FCA with any questions you may have.

Unsecured Loans Result

A Guide To Unsecured Loans

We live in expensive times. Jobs have remained static and so have salaries. But rising inflation rates have resulted in people having to pay more for the same items. This means that some of us can struggle to make ends meet by the end of the month.

This can be manageable if we don’t have any kind of emergency but what if an emergency should actually occur? Where will you find liquid and immediate cash for your such situations? Borrowing from friends and family is OK but its not a long-term option. You do need to find banks and lenders who will lend money quickly but with the least amount of paperwork.

This means you need an unsecured loan. But there is no need to worry. There are ways and means by which you can approach lenders to get money for simple day-to-day requirements. To assist you, we’ve created a short guide that should help you out.

Types of Unsecured Loans

At present, there are three main types of loans that you can get with a short approval time.

Personal Loans — These are unsecured loans in which you do not have to provide a security or lien on property or cash deposits. These loans are actually based on your credit rating and they are approved quite quickly depending on your lender. Please note that you do have to prove employment to be eligible for this kind of loan. On an average, you can get up to £25,000 as a personal loan and repayment may be spread out over 10 years or more.

Secured Loans — Secured loans require security in the form of property, vehicles or cash deposits. It also means that if you cannot repay the loan, you may lose the item you have left as security. However, these loans are better as you can borrow up to £100,000 or more depending on the value of your secured items. These loans also have a very long repayment period and it may extend anywhere from 25 years to 30 years.

Debt Consolidation Loans — These loans are not exactly cash loans but they do gather all your debt under a single lender. By doing this, you get a standard lending rate and a single loan payment per month that is disbursed to all your lenders. A debt consolidation loan can be very beneficial for borrowers who are falling behind in their payments.

How Do I Get These Kinds of Loans?

Of course, there are thousands of lenders online and offline who will gladly help you out with loan procedures. However, the exact procedure will vary from lender to lender. You can choose from online lenders, pay-day lenders who lend for a month, private lenders, banks, credit associations, building societies, supermarket lenders, and even high-street stores. We cannot recommend any particular kind of lender but we do urge you to do your research properly. Compare lending rates, repayment procedures, processing payments, yearly fees and other details before settling on a single lender.

Compare The Market For Loans

Finance.co.uk offers unique comparison tables which allow you to compare the market for loans and find the best deals, such as best APR, longest terms, early repayment options and much more.

Is There Anything Particular To Be Done Before Applying For a Loan?

Yes, most banks have made the loan application procedure quite simple and approval procedures are accelerated to ensure that you get a loan quickly. However, you should remember that you have to repay the amount through monthly payments. If you cannot make payments, you will considered a defaulter and this will affect your credit rating considerably. So, we do urge you to consider these few questions before taking a loan;

  1. Can you afford the payments? – Your monthly loan payment should be about 10-20% of your monthly salary.
  2. What about the APR? – The Annual Percentage Rate is set by the lender. Use this rate to find out just how much you will be paying in the form of interest on your loan.
  3. What about fees? – Most lenders have hefty but hidden processing, approval, paperwork, etc. fees which cut into your actual borrowing amount. Find out how much these payments will be before taking the loan.
  4. Is early repayment possible? – Most lenders don’t like this and they charge a hefty early closure/ early repayment/ early redemption penalty.
  5. Are there any discounts? – You might not know this but lenders do offer discounts, breaks, and other freebies for borrowers who are not ready to sign on quickly. Ask for offers before signing on.

Is This APR Important?

Yes, APR rates are critical to a lender and borrower as they determine just how much you will be paying in the form of interest and for how long. Most borrowers use an online loan calculator and find out how their monthly payments are split. However, the APR is not the be-all influencer on a loan.

For example, along with the principal amount, most lenders will tag on essential fees and payments that will increase your principal amount. Lenders will also assess your APR according to your personal risk-based pricing. This means that the lender will assess your individual situation and then set an APR rate that may be above or at-market rate. It is possible that you may have to pay a higher-than-market rate for your loan if you do not have a steady job or security for the loan.

What Is The Lending Process Like?

Most lenders have a simple process for loan application. We do recommend keeping basic paperwork ready. For example, you should have employment details, housing details, property/car papers, bank account paperwork, credit rating approval, etc. Irrespective of the paperwork you provide, banks will also do their personal checks in the form of credit checks, outstanding payments, loan defaults, bankruptcy notifications, etc. If you do have such notifications on your credit history, please make sure you have sufficient paperwork and justifications for them.

How Do Early Repayment Procedures Work?

Some lenders allow you to close your loan early. Others may charge you an early repayment fee which may consist of almost 1% to 2% of the entire loan amount. Usually, the early you repay the loan, the higher the repayment penalty fee.

Am I Protected Under Consumer Credit Act?

The Consumer Credit Act 1974 protects borrowers and prevents lenders from using hidden fees, exploitative APR rates, etc. According to the Act, the lender has to be upfront about lending fees, charges and payments and any other conditions that are applied on the borrower during the loan tenure. You are also given a cooling-off period so that you can assess the loan and decide whether you actually require the loan or not.

What Is This Cooling-Off Period?

According to The Consumer Credit Act 1974, you have fourteen days from the day of signing the loan or from the date of receiving the loan agreement to cancel the loan. You can also cancel within 30 days of taking the loan after repaying the principal and the interest amount of one month.

How Does The Lender Recover a Profit?

Most lenders will recover their profits from the interest charged on the loan. As a result, it is in your best interests to keep the APR rates as low as possible. Similarly, they also try to recover their profits in the form of hidden fees and charges.

We hope that these few FAQs have helped you understand just how the unsecured loan process works. You should know that lenders will use big terms and complicated words that may confuse you. But you have every right to ask questions and query the terms that you are offered. Don’t be afraid to bargain. Lenders are always waiting for business and they will work with you to provide the best terms to retain your business.

Compare Doorstep Loans

A Guide To Doorstep Loans

Sometimes, you may need some extra cash to handle a financial emergency. Perhaps an unexpected expense has come up, such as a car repair or dental bill. Finding quick and easy cash loans for a reasonable interest rate is not always easy, especially for those who have bad credit.

Doorstep loans are a new type of loan that are becoming very popular with consumers who need cash fast.

What Is A Doorstep Loan?

A doorstep loan is a type of loan that is provided to you by a lender who comes to your home. These loans are normally for small sums of money, starting at £50 and may go up to £1,000 at most.

The loans are given for a short period of time, such as a year, with the repayments being collected on a weekly or fortnightly basis. The lender will actually come to your home to collect the repayments.

How Do These Loans Compare To Other Types of Loans?

Doorstep loans tend to have a much higher interest rate than regular bank loans or credit cards.

For example, if you borrowed £200 from a doorstep lender, you would likely pay a higher interest rate than if you had borrowed the money on your credit card which charged a higher than average interest rate.

Secured loans offered by a traditional lender require that you offer collateral for the loan, while no collateral is required for doorstep loans.

With unsecured loans, you do not need to offer collateral but the interest may still be higher than a secured loan (but lower than the interest on a doorstep loan.)

Pre paid credit cards are different from doorstep loans because with a pre paid card, you can simply add on the amount of funds that you choose before using the card, whereas with a doorstep loan the lender will simply give you the amount of money you want without prepaying anything.

Are Doorstep Loans Regulated By the Government?

All credit lenders must be authorised by the Financial Conduct Authority (FCA) before they can offer loans. If a lender is not regulated by the FCA, they are acting illegally and can be fined or imprisoned.

This will provide some comfort to consumers to know that doorstep lenders are subject to oversight by the Government.

The FCA will carefully examine a doorstep lender and their operations to ensure that their activities are legitimate and not merely a scam.

You can check if a person or company is registered with the FCA by searching the FCA register here.

What Should I Do If I’m Approached By A Doorstep Lender?

Doorstep lenders sometimes generate business by going from door to door, similar to a salesman, offering prospective customers information about their products and services.

If someone comes to your door offering to lend you money, the first thing you should do is ask to see some proof that they have permission by the FCA to offer loans. If they can’t provide this proof, they are likely to be a loan shark.

You should end the conversation right away and report them to the FCA. Legally, lenders should not come to your home uninvited to offer you a loan. They must have written permission to visit your home.

This also applies if you already have a loan and the lender offers you another loan while visiting you to collect repayments.

They must arrange a separate visit for discussing the details of a new loan before signing you up.

This gives you some time to change your mind about the loan without feeling pressured by the lender. In addition, if the lender does visit you on a separate occasion to offer a new loan, you are allowed to change your mind and ask them to leave at any time.

Ultimately, it is up to you whether or not you decide to take a new loan.

I Submitted An Application For A Loan. Am I Obligated To Take It?

No, you are not obligated to take the loan. Submitting an application is merely stating that you wish for the lender to consider and approve the application, and to contact you to discuss your loan options.

During this time, you are free to ask questions if you are unsure about anything.

You may withdraw your request for a loan if you decide that you are not comfortable with it. However, if you are ready to proceed with the loan, you must officially agree to the terms of the loan with the lender.

You then become obligated to repay whatever money you borrowed along with the agreed interest.

When Will the Lender Come To Collect Repayments?

The lender will come to your home to collect the repayments at a mutually agreed time that is convenient for you. When finalising the loan, you can arrange a time with your lender to collect the weekly or biweekly repayments.

If you need to change the date or time of the payment collection you can do this by contacting the lender.

As mentioned, the lender cannot come to your home unless you have given them permission to do so.

What Happens If I Miss A Payment?

You should carefully read the terms of your loan agreement to ascertain whether there is a late fee or penalty for missing a repayment.

In most cases, you will not be charged for missing a repayment, but you should contact the lender to discuss how you can avoid missed payments in the future.

If you are missing payments frequently, the lender will discuss your account history with you and try to work out a solution for paying back the debt.

Financial Help

While you may be tempted to accept an offer from a doorstep lender, you should think it through carefully first.

You may feel frustrated because you have bills that you can’t pay, but don’t rush into a decision. Remember that borrowing money at a high rate of interest may add to your financial problems.

If you are struggling to pay bills or meet your financial commitments, get help from a debt advice service.

The National Debtline is a free telephone helpline that aims to help people who have debt problems. It is open to anyone living in England, Wales or Scotland. This is a free and confidential service that may help you get out of debt. The number is 0808 808 4000.

Alternatively you can reach them online at nationaldebtline.org

The Money Advice Service is an independent service created by the government to help people manage their money better.

They provide free, unbiased advice about credits cards, loans and how to handle debt. You can reach them at 0300 500 5000 or through their website at moneyadviceservice.org.uk.

Conclusion

Only you can decide is a doorstep loan is right for you. If you are feeling financially strained, don’t rush into a decision or take out a loan in haste. You need to know what all of your options are.

Do your research and make sure that you are fully informed about the terms of the loan before signing a contract. If you have any doubts about a lender, contact the FCA with any questions you may have.

Need A Loan For A Car?

A Quick Guide To That First Car Loan

In many ways, there has never been a better time to obtain a cheap car loan or a car finance offer. Even if you do not have the most sterling credit, manufacturers are all but desperate to keep product flowing through their sales channels.

This means that their dealer networks are being prodded to find buyers wherever and whenever they can. Yet many people are unaware of this opportunity or believe that they cannot qualify even though standards have loosened considerably.

Things Aren’t As Bad As You Think

Not only are there many people who do qualify but do not realize that they qualify, but there is also an even larger amount of potential car buyers who are right on the cusp of qualifying under the currently loosened standards.

For this latter group, a few small tweaks could get them into the contest, but they need to understand the rules of the loan qualification game to successfully play.

To begin with, it is important to understand that “no” does not always mean “not” but rather “no, we are not the ones who can give you a loan”.

There are countless loan providers out there in the world, and they all make their livings by finding someone they can provide funding to.

They have a direct incentive to say “yes” but the algorithmic gods must be propitiated first.

Know Your Own Situation Before You Shop

Start by having a look at your own credit report. This will provide you with two important bits of information. The first is your credit score– which is nothing more than a numerical assessment of whether you are a great credit risk, a good credit risk, or a poor credit risk.

Don’t be discouraged if you come back in the poor credit risk category. This is better news than having no previous credit at all. Those are the people which the companies are most reluctant to loan to.

The second bit of information is a listing of your accounts and payment history. It is very important that you examine this list closely.

Errors are more frequent than you might suppose, and most of those errors are usually going to be against you. You might have open credit lines that are not listed.

You might have been flagged for late payments even though you have always been on time. Your identity might have been jacked and someone has been running up bills in your name and not making any payments at all. So have a careful look and make sure that you correct any inaccuracies.

Merely by doing so, you may elevate your score enough to warrant consideration for a loan, or it may bump you up enough to make you eligible for more favourable terms.

Finding Your Niche In The Credit Market

Once you have done everything in your power to ascertain and improve your existing credit score, the time finally comes to look at what sort of car loans might be on offer.

Narrow down the many potential lenders to a list that only contains those who cater to a clientele with the same sort of credit parameters as you personally have.

Run a quick Internet search for something along the lines of “car loans for xxx credit score”. This should produce a surprisingly large number of entities that want to do business with you.

Saying No To Say Yes

It is important to be persistent, however. Just because someone says yes to your application, you should not automatically jump on it.

There may be others who will also approve your application and may offer superior terms. Indeed, there are many shops which throw out very unfavourable offers as soon as they receive an application and count upon that person snapping it up without doing any comparison shopping at all.

You must have a little confidence and faith in yourself. You must also exercise a little patience.

Avoid Unrealistic Expectations

Another important point to keep in mind is the need to adjust your horizons a little bit. It is unlikely that you will be able to get terms on a Rolls or Lamborghini on your first go around.

You will need to consider something a little more practical and affordable. It is even true that different manufacturers will have different criteria although they offer the same sort of vehicle in the same price range as someone else.

Newer brands often must provide far more generous terms than do old established ones. It is often the only way in which they can break into a new market. New car companies spell opportunity for those on the lower end of the credit rating spectrum.

Avoiding Financial Suicide

Another important part of the equation lies in figuring out how much you can afford to pay monthly.

This should not be calculated on a maxed-out level but as a reasonable examination of what you can afford without getting yourself into trouble if something goes wrong on any month. You need a cushion, in other words.

A loan payment also does not put petrol in the tank or provide for other costs such as registration and insurance payments.

These need to be deducted from any sum you may assume you are capable of handling– unless, of course, you expect to use your new car as a planter in the back garden rather than as necessary transportation.

It should also be kept in mind that you may be able to get by with a more-affordable used vehicle rather than chasing a new one.

New vehicles are notorious for losing value from the moment you drive them off the lot. If your need is for basic transportation rather than prestige, a good clean used vehicle will cost less both in absolute terms as well as in monthly payments.

More importantly, getting car loans of any sort, no matter how humble a vehicle it may be, paves the way for better terms on a nicer car once you have proven yourself on this entry-level car loan.

Set Yourself Up For Round Two

In truth, everybody who is just starting out with a car loan is likely to be offered less favourable terms than for those who have been through the process more than once.

Keeping your initial level of pain to the minimum will get you on the ladder up to the car you really want much faster than if you really load yourself up on your first purchase.

Many people who go for the best they can qualify for often find themselves in a situation that is known as being “under water”.

This means that their car depreciates faster than the monthly payments reduce the balance owed and leaves them trapped in an aging vehicle or forced to pay off their existing car loan by rolling it into their new loan package.

Be Patient And Wise

To summarize, you must know yourself first. Find out what your credit score is and explore ways to improve it. Figure out your true price range and stick to it.

Shop around for loans and vehicles that will fit into these constraints without leaving you at risk of financial destruction if things go west.

Remember that your goal of this first car loan is to get your foot in the door. A car loan of any sort will improve your credit score and allow you to afford a much nicer one at better terms the second time you shop for one.

A Guide on Secured loans (Second Charge Mortgages)

A secured personal loan is also known as a second charge mortgage. It lets you borrow a lump sum of money which is secured against a property.

The property is secured by the lender through a ‘second charge’, which ranks after your main mortgage (which is held on a ‘first charge’ basis). This is a legal arrangement that is registered with the Land Registry.

You can use the money for whatever purpose you want (provided that it is not illegal or for commercial gain). However, second charge mortgages are usually used to fund large purchases (such as purchasing a new car), home improvements, or to consolidate existing debts.

Throughout the term of the loan, regular monthly repayments must be made. The term of the loan can usually be between five and 25 years.

The Financial Conduct Authority (FCA) have been regulating the selling and administration of first charge loans for quite some time. The FCA now also regulates second charge loans. Second charge loans are subject to exactly the same rules as regular mortgages.  This implies that you will need to be able to prove that you can afford to repay both the first mortgage and the second mortgages, with some room to spare.

Who is a secured second charge mortgage suitable for?

Secured loans are for those borrowers with an existing mortgage who want to borrow larger amounts of money than what standard personal loans can offer, usually a maximum of £250,000. Borrowers tend to have established equity in their homes that they can utilise as security against the loan.

What should I look for when taking out a second charge mortgage?

There are some catches and things that you need to understand before you commit yourself to this kind of secured loan, including:

  • The ‘second charge’ on your property signifies that if you default on a secured loan, the lender can eventually take you to court and order the repossession of your property. The first charge lender gets to be paid back first, and the second charge lender receives what is left, up to the outstanding debt’s value.
  • Interest rates of second charge mortgages are usually variable, which means that it is difficult to budget as the rate could increase or decrease. If you also have a  variable rate mortgage,  you might be affected twice if rates rise, so make sure that you can afford it.
  • Consolidating debt is usually seen as the last resort of homeowners. However, it can be a great way to get you out of a hole in the short term. Remember, if you opt for lower monthly repayments in return for a longer loan period, you will end up paying more in the long term.

What You Should Know Regarding a Graduate Loan

Graduate loans work in similarly the same way as unsecured personal loans. However, banks manage to grant better rates for graduates. You will usually have to possess a current account with the same bank or building a society to be qualified for a graduate loan.

After agreeing to make regular repayments (usually by direct debit), a lump sum will be lent to you. Graduate loans are available for up to a maximum of £25K. The said loan is repayable over a predetermined period, usually between a period of six months to 10 years

Interest will be charged by the lender on the borrowed amount. The interest tends to be fixed at the start of the loan, which implies that repayments will remain the same throughout the term; some loans, including flexible loans, however, can be variable.

This interest charge is registered as an APR (Annual Percentage Rate). The law requires all lenders to quote the APR. The advertised typical APR quoted is needed to be proposed to at least 50% of borrowers.

The APR usually depends on the size, and sometimes the term, of the graduate loan. This implies that the best rate for one graduate loan amount may not be the best rate on all loans.

The same rate for all their borrowers may not be offered by some lenders. That is why you need to check the best rate for the amount and term you are aiming for.

Things to consider regarding graduate loans:

1. Representative APR

You may not always receive the advertised representative APR on a graduate loan. The rate you are offered can depend on your credit rating. Lenders will use a scoring system to check how credit-worthy an applicant is.

2. Graduate loan early settlement penalties

You can save hundreds of pounds in interest if you pay off your graduate loan early. However, it is crucial to remember penalties are applied by a number of lender to those who opt to close their graduate loans prior to the end of the term.

3. Graduate loan deferment periods and payment breaks

Many lenders will allow a grace period between the time that you have received your loan and the time that the first payment is needed to be made. Interest is still charged over this period even though this will give you a break from payments thus, increasing the total interest payable. Some lenders may also offer breaks during the term of the loan. However, interest is charged on the outstanding balance. This signifies that a higher loan amount is left unpaid for a longer period. Charges may also be incurred during these breaks.

4. Graduate loans & same-day funds

Same-day funds facilities are offered by some lenders. Same-day funds facility means that you receive your money on the same day that you complete the application. Usually, there will be a fee for this type of service, which can be as high as £50. So you have to consider this carefully.

5. Direct debits

A direct debit is required by most lenders so you can pay the monthly instalments on your graduate loan. You need to make sure that your bank account will be able to accept these and the money is available for making payments.

6. Payment protection insurance for graduate loans

This is an optional insurance that will satisfy your repayments should you not be able to work under certain circumstances. Which includes:

  • Accident
  • Death
  • Unemployment
  • Sickness

You should know that it is of utmost importance to examine the small print to make sure that the cover that is provided is suitable to your needs.

Compare Unsecured Personal Loans

A Guide To Unsecured Loans

We live in expensive times. Jobs have remained static and so have salaries. But rising inflation rates have resulted in people having to pay more for the same items. This means that some of us can struggle to make ends meet by the end of the month.

This can be manageable if we don’t have any kind of emergency but what if an emergency should actually occur? Where will you find liquid and immediate cash for your such situations?

Borrowing from friends and family is OK but its not a long-term option. You do need to find banks and lenders who will lend money quickly but with the least amount of paperwork.

This means you need an unsecured loan. But there is no need to worry. There are ways and means by which you can approach lenders to get money for simple day-to-day requirements.

To assist you, we’ve created a short guide to help you find the best unsecured loans, & best personal loan offers in the UK.

Types of Unsecured Loans

At present, there are many types of loans that you can get with a short approval time.

Personal Loans — These are unsecured loans in which you do not have to provide a security or lien on property or cash deposits.

These loans are actually based on your credit rating and they are approved quite quickly depending on your lender.

Please note that you do have to prove employment to be eligible for this kind of loan. On an average, you can get up to £25,000 as a personal loan and repayment may be spread out over 10 years or more.

Debt Consolidation Loans — These loans are not exactly cash loans but they do gather all your debt under a single lender.

By doing this, you get a standard lending rate and a single loan payment per month that is disbursed to all your lenders.

A debt consolidation loan can be very beneficial for borrowers who are falling behind in their payments.

How Do I Get These Kinds of Loans?

Of course, there are thousands of lenders online and offline who will gladly help you out with loan procedures. However, the exact procedure will vary from lender to lender.

You can choose from online lenders, pay-day lenders who lend for a month, private lenders, banks, credit associations, building societies, supermarket lenders, and even high-street stores.

We cannot recommend any particular kind of lender but we do urge you to do your research properly. Compare lending rates, repayment procedures, processing payments, yearly fees and other details before settling on a single lender.

Compare The Market For Loans

Finance.co.uk offers unique comparison tables which allow you to compare the market for loans and find the best deals, such as best APR, longest terms, early repayment options and much more.

Is There Anything Particular To Be Done Before Applying For a Loan?

Yes, most banks have made the loan application procedure quite simple and approval procedures are accelerated to ensure that you get a loan quickly.

However, you should remember that you have to repay the amount through monthly payments. If you cannot make payments, you will considered a defaulter and this will affect your credit rating considerably.

So, we do urge you to consider these few questions before taking a loan;

  1. Can you afford the payments? – Your monthly loan payment should be about 10-20% of your monthly salary.
  2. What about the APR? – The Annual Percentage Rate is set by the lender. Use this rate to find out just how much you will be paying in the form of interest on your loan.
  3. What about fees? – Most lenders have hefty but hidden processing, approval, paperwork, etc. fees which cut into your actual borrowing amount. Find out how much these payments will be before taking the loan.
  4. Is early repayment possible? – Most lenders don’t like this and they charge a hefty early closure/ early repayment/ early redemption penalty.
  5. Are there any discounts? – You might not know this but lenders do offer discounts, breaks, and other freebies for borrowers who are not ready to sign on quickly. Ask for offers before signing on.

Is This APR Important?

Yes, APR rates are critical to a lender and borrower as they determine just how much you will be paying in the form of interest and for how long.

Most borrowers use an online loan calculator and find out how their monthly payments are split. However, the APR is not the be-all influencer on a loan.

For example, along with the principal amount, most lenders will tag on essential fees and payments that will increase your principal amount. Lenders will also assess your APR according to your personal risk-based pricing.

This means that the lender will assess your individual situation and then set an APR rate that may be above or at-market rate. It is possible that you may have to pay a higher-than-market rate for your loan if you do not have a steady job or security for the loan.

What Is The Lending Process Like?

Most lenders have a simple process for loan application. We do recommend keeping basic paperwork ready. For example, you should have employment details, housing details, property/car papers, bank account paperwork, credit rating approval, etc.

Irrespective of the paperwork you provide, banks will also do their personal checks in the form of credit checks, outstanding payments, loan defaults, bankruptcy notifications, etc.

If you do have such notifications on your credit history, please make sure you have sufficient paperwork and justifications for them.

How Do Early Repayment Procedures Work?

Some lenders allow you to close your loan early. Others may charge you an early repayment fee which may consist of almost 1% to 2% of the entire loan amount.

Usually, the early you repay the loan, the higher the repayment penalty fee.

Am I Protected Under Consumer Credit Act?

The Consumer Credit Act 1974 protects borrowers and prevents lenders from using hidden fees, exploitative APR rates, etc. According to the Act, the lender has to be upfront about lending fees, charges and payments and any other conditions that are applied on the borrower during the loan tenure.

You are also given a cooling-off period so that you can assess the loan and decide whether you actually require the loan or not.

What Is This Cooling-Off Period?

According to The Consumer Credit Act 1974, you have fourteen days from the day of signing the loan or from the date of receiving the loan agreement to cancel the loan.

You can also cancel within 30 days of taking the loan after repaying the principal and the interest amount of one month.

How Does The Lender Recover a Profit?

Most lenders will recover their profits from the interest charged on the loan. As a result, it is in your best interests to keep the APR rates as low as possible. Similarly, they also try to recover their profits in the form of hidden fees and charges.

We hope that these few FAQs have helped you understand just how the unsecured loan process works. You should know that lenders will use big terms and complicated words that may confuse you.

But you have every right to ask questions and query the terms that you are offered. Don’t be afraid to bargain.

Lenders are always waiting for business and they will work with you to provide the best terms to retain your business.

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