With various loan amounts, flexible loan terms and interest rates tailored to the borrower, personal loans are all purpose credit options that can meet your needs in an affordable way.
In this article we take a closer look at personal loans and what they can do for you.
Comparing personal loans
The financing industry is a competitive one which is great for borrowers since lenders are all looking to offer cheaper or better credit options but, it also means that there are some lenders that offer far better loan deals than others. In order to distinguish one from another and, find the best or most suitable option, we need to compare.
There are many lenders to choose from but, the easiest option is to use a loan comparison site to compare loans and find the most suitable option for you. A loan comparison site offers borrowers a range of quotes from different lenders and you don’t even need to apply to compare as it’s completely free to use the comparison tables.
Choosing a personal loan
Personal loan rates are usually lower than for most other loans such as short-term loans and payday loans, and they do not require a lot of information or supporting documents when they are unsecured. During the loan application the lender will ask you a few questions to make sure that they are giving you the loan that you need.
Look at interest rates, fixed rates or variable rates and the total cost of your loan at different repayment terms. You can do this by using the loan comparison tables made available on the various comparison sites.
Enjoy a quick & easy online application
The online loan application only takes a few minutes to complete, thereafter you will be contacted with the outcome of your loan. If you do not qualify for the loan amount that you applied for, apply for a lower amount.
Make sure that the loan you qualify for is one that you can afford. Defaulting on payment will affect your credit score and you can get a bad credit history if you bad repayment habits are reported to the credit bureaus.
Required documents when you apply for a loan
When you apply online for your loan, there are a handful of documents required. You need to supply the lender with your payslips and proof of residence.
They will also need a copy of your ID document and your bank statements. If you do not live in the UK but are working here for a long period and need a loan, you can apply with your Work Visa.
If you’re taking out a secured personal loan you will have to provide details and supporting documents pertaining to the security you’re putting up. Those that are getting a cosigner on their loans will have to also provide the supporting documents and details of their cosigner.
Let’s look the types of loans available
There are many types of loans that can be taken out depending on your needs and affordability. We all know what home and car loans are there for but there are also general purpose loans that we can make use of if we’re looking to do something other than but a home or vehicle.
Short-term loans with short repayment terms
If you need a loan that you would like to pay off in 6 months, then a short-term loan is for you. Short-term loans are general, all-purpose loans that can be obtained from most lenders including banks and alternative online lenders.
Payday & quick cash loans
If you need a bit of quick cash to tide you over until payday and you know that you will be paying the money back once you have got your paycheck, then you should look at the payday loan.
Personal loans that can be tailored to your needs
Personal loans include both of the loan options above but the term is usually used to describe loans that have repayment term ranging from 1 to 7 years. These are flexible loans that can be molded to suit your individual needs and generally have a lower interest rate than payday or short-term loans.
Bad credit loans or secured loans
If you have a bad credit history, chances are high that you will be unable to qualify for a personal loan at a competitive interest rate. In such a case you can try to apply for a bad credit loan. Generally speaking, bad credit loans are secured by either a property or a vehicle and come at higher interest rates.
Consolidation loans for better debt management
A popular use for a personal loan is to consolidate your debt. With a debt consolidation loan, you only have one affordable payment to make each month. This makes managing debt a whole lot easier and simpler and reduces the chances of missing a payment. The benefit of this is that as soon as you have finished paying your loan you will be debt-free.
Make a personal loan work for you
There are many ways to make personal loans work for you, all you have to do is determine the amount that you would like to take out and the term within which you want to repay the loan.
Use the online loan calculators on the lender’s website to quickly select a loan amount and term that suits you. If you’re choosing a long-term personal loan as it has lower interest rates, this will help lower your monthly repayments but will cost you more overall.
This is why it’s crucial to make use of a loan calculator and pay attention to the comparison rate that a loan carries rather than just it’s interest rate which doesn’t take fees into account.
Get insurance on your loan
Protecting yourself by getting loan insurance, is a good idea as it will protect you when you are unable to pay your loan. You might become disabled or lose your job. You will have a loss of income making it impossible to keep up with your loan repayments.
With insurance you can rest assured that should any of these things happen, your debt will be settled and you will have one less thing to worry about.
Finally, remember that when you’re looking for a loan, personal loans are generally the best option both in terms of cost and flexibility. In addition, they can be obtained online from just about any credit union, bank or alternative lender.