Personal loans that don’t box you in
Personal loans form a broad category. These loans are mostly taken out for any personal reason, including bills, medical expenses, school fees, buying something for your own uses, travel and holiday expenses, as well as emergency situations where the money is required.
The best personal loans in the UK
Most personal loans offered by UK based lenders are unsecured. This is ideal for people with no assets, as collateral is not a requirement. This increases the availability of personal loans to a wide number of people.
Keep in mind that unsecured loans often have higher interest rates. This is a security measure taken by lenders to avoid risks of losing their money.
Some lenders do offer secured personal loan
The interest rates are relatively lower and the loan itself is easier to afford. However, this kind of personal finance is only available to a limited set of people; those who have assets in the form of property or vehicles.
They hold the asset as collateral and a loan with lowered rates is obtained. While repayment is flexible, and money is saved from lowered interest rates, there are some dangers of secured loans.
You may still be unable to pay back the loan in due time, and failure to do so leads you to lose the asset that was held as collateral. In other words, you might end up losing your house.
The amount you can borrow via personal loans can be huge, being up to 20,000 pounds. However, this depends on the lender and your own needs. The amount you borrow is also a deciding factor in the term of repayment and rates.
Financial planning is important
Personal loans should be taken out, only when it is absolutely necessary. You must do your research before deciding which loan is best suited to your financial needs.
You should take advantage of loan comparison websites and look at the APR and repayment terms offered by different lenders. Fraudulent organizations must be avoided, and the legitimacy of the lender must be ensured.
A benefit of a personal loan is the fixed interest rate that comes with it. This means that the repayment amount that you pay back monthly also remains unchanged throughout the term of the loan.
As a result, you can do effective planning and manage your money. You can create a budget that will allow you to handle your finances better and save enough money every month to pay back the loan.
Personal loan eligibility criteria and the procedure to follow
You can find personal loans at all major banks in the UK. However, banks may offer a lack of flexibility and extra costs that make the personal loan more expensive. Credit unions formed by communities also provide personal loans; here the terms are flexible and mutual benefits are gained.
Secure online loan application makes it easy
Many lenders now offer a completely online application, you can access the application form on the websites and submit it online. The online loan application is usually processed quicker than many other loans as thorough assessments are not always done.
Once approved, some lenders require you to sign online contracts, while others want you to visit their branch or office.
However, only residents or citizens in the UK can apply. Therefore, the lender always asks for your ID and proof of your residence. You must be over 18 to apply.
In addition, you should be self-employed or be employed full time, as this gives an indication that you can afford the loan and you would be able to pay back then full loan amount and interest under the repayment term.
As proof of your employment status, the lender would require you to submit bank statements, recent payslips and in some cases, letters from your employers. All in all, personal loans are one of the most popular loans in the UK. These are not difficult to obtain, as long as the lending criteria are met.