There are numerous reasons why we may need an unsecured loan, from simply tiding you over until payday, to the dreaded Christmas shopping. Unsecured loans have various benefits over secured loans as the borrower doesn’t have to be a homeowner.
Here are our top tips:
- Perhaps the most important thing to consider is your credit rating. It is always a good idea to check it before you apply for a loan. There are several ways to improve it, some of them fairly simple, such as cancelling any unused credit cards and ensuring that you are on the electoral role.
- It is important to make sure that you shop around, but don’t apply for every single loan that you find. Compare the APR’s, and consider the repayment terms including any charges and work out which is the most cost effective loan for you. It is also worth checking with your own bank first, as they may be able to offer a deal as you are already one of their customers.
- Consider carefully the total amount that you wish to borrow. Lending works in tiers and in some cases you can end up repaying less each month if you borrow a higher amount at a better rate, so check the interest rates offered, and the lending tiers. For example borrowing £7,500-£15,000 attracts a lower rate of interest than £3,000-£6,000, so if you need to borrow around £6,500 it may be worth looking at borrowing slightly more at the lower rate of interest.
- Always, always, check the small print and the terms and conditions of any special offers. Some lenders offer the best rates to those who are existing customers or hold a loyalty card, but there may be some qualifying criteria, so always check to ensure you are eligible before applying.
- Even those with less than perfect credit can still apply. OK so you may not be eligible for the best deals, but there are more and more lenders with a more extensive range of products that are willing to lend even to those who may have had problems in the past. Use this as a platform to begin rebuilding your credit history and so long as you maintain the repayments, this will help improve your credit rating.