Wednesday, December 12, 2018

Five Simple Steps to Finding the Right Loan

Submitting a loan application isn’t something to be taken lightly. Whether you are looking to borrow £1,000 or £100,000, it’s important to know you’re getting a deal that suits your requirements and budgets.

These days, there’s no shortage of options to explore. If anything, you’re more likely to find yourself wondering where to start.

So with this in mind, what follows is a brief overview of the five simple steps that stand between you and your perfect loan:

1. Consider if you really need a loan

Before going any further, it’s worth considering whether or not you actually need a loan. The reason being that it’s never a good idea to take on additional debt for frivolous reasons.

In addition, you may also be able to cover the expense using your existing credit facilities. A credit card with a low APR, an interest free overdraft or perhaps the savings you’ve got stashed away in the bank. If there’s a way of getting things done without taking on additional debt, it’s an option to consider.

2. Check your credit score

These days, having an imperfect credit score doesn’t mean exclusion from financial support. Nevertheless, it could mean higher overall borrowing costs, or exclusion from certain lenders.

If your credit report is only slightly blemished, your application will probably be considered by most lenders. If your credit report is in a sorry state, you might want to target lenders who specifically cater to poor-credit applicants.

Always remember that denial of your application could inflict further damage on your credit report.

3. Evaluate your financial position

When applying for a loan, you need to consider your financial position beyond today. You may be able to cover the repayments right now, but what if things take a turn for the worse a few months down the line? Are you absolutely sure that no matter what happens, you won’t slip into arrears?

Taking chances is never a good idea. Unless you’re 100% confident in your capacity to repay the loan, you may wish to delay your application.

4. Compare the market in full

Comparing the market in full means looking beyond the High Street. Up and down the UK, there are dozens of specialist lenders who routinely offer secured and unsecured loans at rates that outperform those of major lenders.

Working with a specialist loan comparison website or independent broker is therefore advisable. Particularly for anyone with poor credit, who’s unlikely to be fairly considered by a major High Street bank.

5. Consider overall borrowing costs

Last but not least, the vast majority of loan products attach costs that go far beyond monthly and annual interest rates. Arrangement fees, administration fees, final settlement fees, late payment fees and so on – all stand to significantly increase the overall cost of the loan.

When carrying out your market comparison therefore, be sure to factor all borrowing costs into the equation. Once again, this is where an independent broker can help you compare the best deals on the market from specialist lenders across the UK.

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