Loans Choice
www.loans-choice.org.uk
Pay-day loans give you a quick source of cash until next pay day.
Personal loans are often secured on your home.
Tenant loans online may give you a better rate of interest.
Unsecured loans are available from supermarkets, banks, and building societies.
These loans are used to fund courses to improve your job skills.
Car and caravan loans funded by Hire Purchase, Personal Contract Purchase etc.
Top-up credit cards are also known as pre-paid debit cards.
Debt consolidation loans are risky if you do not keep up with repayments.
Equity release and rent back is not always the best solution. Read our guide first.
IVA specialists can often save you money.
A mortgage or remortgage can be used for home improvement.
What is aer? It stands for Annual Equivalent Rate.
Repair and update your bad credit rating.
Loans, Things You Should Know
The aim of this website is to explain the problems that can occur when you need a loan and how you can avoid or minimise them. Hints are given to help you obtain the best deal possible even if you have a bad credit history. Use our comprehensive glossary to explain the legal and technical debt advice terms used by lenders.
There are two main types of loan: secured and unsecured. Credit cards, for example, are unsecured so at worst you will be taken to court if you fail to keep up payments. However, many of the debt consolidation loans advertised on TV are secured on your home so you may have it repossessed if you fall into arrears.
The distinction between these types of loan are fundamental to the choice you must make. You will almost certainly have to pay a higher rate of interest for an unsecured or a bad-credit loan as lenders consider them a greater risk. The annual percentage rate (APR) will probably be less for a secured loan as the lender can repossess any security you have placed upon it. If you are unsure about the meaning of some of the terms used in this guide please consult our Glossary for an explanation.
For similar loans and conditions the APR will vary from loan company to loan company so you should get a quotation from at least three different sources. Even then you should read the small print and work out exactly how much you need to pay per month for each loan. I am afraid there is no short cut. If you can do this you are probably an accountant and don't need a loan anyway so I have included a Loan Payment Calculator here to make comparisons easier. The amount of the loan required will also dictate which type of finance should be sought. Obviously if you want to buy a house, a mortgage secured on the house you are buying, is generally considered to be the best bet. Home loans, home owner, and home improvement loans can also be raised on a mortgage or second mortgage. However, a bank or other finance company personal loan may be more suitable if you need a car loan.
When you apply for a loan the prospective lender will take many things into account such as your previous credit history and employment record. Some firms actually advertise that they welcome people who have a poor credit history or have had loans refused elsewhere. Of course they will charge a very much higher rate of interest to cover the extra risks involved.
Hints
- If you decide to take out a secured loan what you are actually saying is... I bet my house and home that I can keep up my repayments. Take out indemnity insurance to protect yourself.
- The loan rates of well known lenders such as banks can vary considerably and a small local lender might be tempting; if a loan seems too good to be true, it probably is.
- Beware of some apparently cheap loans; they may add large additional arrangement fees.
- Remember that you won't be able to get a loan from a bank or other official source unless you are over the age of 18 as debts are not legally enforceable below that age.
- Finally, NEVER have anything to do with unofficial lenders such as loan sharks. You will almost certainly live to regret it. Stick to large well known companies who have a known track record for fair dealing and reliability.
- Debt advice can be free so if you think you have a problem always seek impartial information first from the Citizens Advice Bureaux. Do not rely on information from your bank or building society. Their staff will sell you something you do not need and even make things worse for you just because they have targets to reach each month to attain a bonus.
You may have seen the recent TV ads where someone is shown taking out a loan for £25,000 over a period of 180 months. A few months doesn't sound very long; but of course it is actually 15 years. And at the typical rate of interest quoted (not necessarily the highest) you will pay back over £43,000 before the loan is repaid in full. THINK CAREFULLY BEFORE TAKING OUT THIS SORT OF LOAN. Remember "If you decide to take out a secured loan what you are actually saying is... I bet my house and home that I can keep up the repayments."