6 Tips On Getting a Loan in 2020
Finding an affordable loan if you have a poor credit rating that is available now can feel an impossible task.
Don’t give up hope though because it is not as tricky as you would imagine and by following the secrets outlined in the article below.
1. There is more choice than you would imagine
Lenders want their customers to believe that they will not get a better deal anywhere else.
Through a combination of skilled advertising and a lack of knowledge from many customers, it is surprising just how often people believe this without taking the time to look around.
Even if you have a terrible credit rating and everything seems to be against you, there are more options available to borrowers than ever before.
With loans ranging from guarantor loans to the infamous payday loans, there truly is something for everyone.
- Personal loans often provide the lowest risk because they are unsecured, for more information see the Money Advice Services article here.
2. You don’t have to do the hard work
Compare loan sites (like this one 😀) remove hard work of reading lots of lenders website. In the past you had to visit each lender individually, it is now possible to submit a single application to a number of lenders.
If you have a poor credit rating and are looking for a loan, quotes from us are no obligation and help you quickly and easily find the best deal available to you.
- Please Note – Shopping around is almost certain to highlight a great deal, regardless of your credit rating.
- The excellent Rupert Jones at the Guardian has written an article offering some invaluable tips ‘How to find the best personal loan without damaging your credit rating‘
3. Your credit rating is key
Applying for a loan without checking your credit rating is a huge mistake that may result in a poor credit rating taking another hit.
Many lenders check the credit rating of a borrower during the application process to decide how much of a repayment risk they believe that they pose. This means that essentially, the worse your credit rating is, the smaller the chance of having your application granted.
Without knowing the state of your credit score, you could place your focus on a particular type of loan when cheaper options may be available.
- If you are still a little unsure regarding the importance of your credit rating, this article may help to change your mind ‘What Is a Good Credit Score and Why Is It Important?‘
4. The ‘Representative APR’ is not the rate you’ll pay
You’ll notice that loans are quoted with a ‘representative APR’; its a little-known fact that not all applicants will be eligible for this rate!
The BSI (British Standards Institute) says
The Representative APR must reflect at least 51% of businesses expected to result from the advertisement. The standard information must be representative of agreements to which the Representative APR applies.
In other words, the Representative APR is the rate that at least 51% of lenders customer pay including all interest and fees. So you might be in the 49% and pay a rate that is higher or lower depending on your own personal circumstances.
The ‘Representative APR’ does make comparing lenders and their loans easier, but it does mean that the quote you receive is far more expensive (or cheaper) than the Representative APR
- The Money Saving Expert takes a closer look at this in the following article – ‘Interest Rates Guide: Compound interest, AER and APR explained‘
- See our lenders Representative APR’s
5. Some loans can be repaid early
With many loans, you may have the opportunity to make additional (or larger) payments to pay off the loan quicker and reduce the overall cost.
The Money Advice Service article – How to reduce the cost of your personal loans states that:
With unsecured loans taken out after 1 February 2011, you can make extra payments of up to £8,000 in a 12-month period without penalty in almost all situations. For extra payments of over £8,000 the maximum penalty is 1% of the extra amount paid above the limit. For example, if you paid back £9,000 – £1,000 over the limit – the most you could be charged would be £10.
- Note – Most of our lenders allow overpayment, and early repayment without penalty, however always double-check with any lender before taking out a loan.
6. Loyalty doesn’t pay
Just because you have taken out a loan with a company before, it does not mean that you have to use them again.
Some companies even offer better deals for new customers so it’s really important to ensure that you identify all of your options before signing up for. You shouldn’t stay with the same mobile phone company or energy provider out of blind loyalty if better options are available, why shouldn’t you apply this to your chosen lender as well?
- The perfect example of this was highlighted in a recent article in the Independent titled ‘Citizens Advice files super complaint over utility customers’ £4bn ‘loyalty penalty‘
Do you know what your credit file looks like?
Staying on top of your credit rating is absolutely crucial if you wish to become eligible for the cheapest loans on the market.
Despite there being a number of Credit Reference Agencies in the UK from which you can obtain your credit report, they are all likely to come back to you with slightly different information.