Apply for a Loan
If you have been thinking about borrowing money whether to; buy a big ticket item, carry out some home improvements or to consolidate existing debt you may be wondering how exactly to apply for a loan and if there is the right loan for you.
Taking out any kind of loan is a long time commitment usually taking years to fully pay off. You therefore want to ensure you are getting the best loan you can to suit your needs.
As with other financial products like current accounts and credit cards interest rates on loans and other terms and conditions vary hugely between the different plans and lenders. The best option for you is not necessarily the best option for everyone.
You can use the calculator on this website to compare over 200 different loans from over 20 different providers, to help you see what the different options for you are.
Types of loan
Before you apply for a loan you need to decide exactly what sort of loan you want:
Personal Loans – Also known as unsecured loans are a type of loan that typically allows you to borrow up to £25,000 over a variable time period. Generally speaking the larger amount you wish to borrow the lower the rate of interest, however this does not mean you should take out a larger loan you cannot afford to service or repay.
Lenders will advertise their personal loans with a Representative APR however this is not the amount you are guaranteed to get from taking out a loan with them, your actual interest rate will be dependent on numerous factors such as; how much you earn and your credit history, they will also take this into consideration when they evaluate how much they are actually willing to lend you.
Homeowner loan – If you want to borrow a larger amount of money and you are a homeowner a secured loan might be an option. With this type of loan because you have place an asset (such as your home or other property) as security banks tend to be willing to lend more, usually up to £250,000. The actual amount you can borrow is dependent on the value of your home and how much equity you have if you have a mortgage.
Guarantor loan – If you have an adverse credit history you may have considered a Guarantor loan. With this type of loan you have someone else with a better credit history agree to be a guarantor for you on the loan, this means they take on board some of the responsibility of the loan. Because of this agreement if you ever failed to make a repayment the lender would require the guarantor to pay it for you.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. If you are at all unsure of the suitability of a particular product for your circumstances you should seek independent financial advice.