Personal loan is the very first option to meet out financial emergencies to which all of us come across often. Borrowing has become the very common for the households from all walks of life. Whether you are a salaried employed, start up business owner, small business owner, or unemployed, the easy availability of personal loan at online loan stores in the UK instills the confidence to meet out any financial emergency. The general concept about personal loan is that it is a costly and complicated affair but it is just opposite to it. Managing the financial emergencies any time by personal loan is quite easy and affordable also even for the first time borrower irrespective to credit score.
What Is Personal Loan In Broad Concept?
It is the debt taken by an individual from a bank or non-banking financial agency to meet out personal financial need. This debt is made available on the basis of regular income level, credit history, employment record and repayment capacity etc. Unlike other loans like home loan or car loan, the personal loan is sanctioned without any collateral. If the borrower defaults, the lender can’t auction anything in borrower’s possession. However, any default on personal loan reflects in credit report, which can cause serious problems in future.
When should you Apply?
Although personal loan gives the borrower complete freedom to use the money because the lender is concerned only with on the time repayment but you should use this facility when it is must with a justified reason. The primary criterion for personal debt revolves around four major considerations:
- If you need instant financial help between £100 – £25,000
- If you can repay the entire debt plus interest amount within 1 month to 60 months; repayment period depends on several factors
- If you want to improve credit score
- If you are only with this borrowing option
When shouldn’t you Apply?
Although getting personal loan through online direct lenders is quite easy for anyone even for the borrowed credit borrower; still, you must think twice about the borrowing approach:
- If you don’t have regular income source for consistent on the time payment of installments
- If you expect extraordinary return by investing the debt like in share trading
- If you want to invest the debt for starting a business
- If you want to borrow on behalf of others
- If you want to use unsecured personal debt to pay off other debts
Benefits that Attract You:
Multiple benefits make the unsecured personal loans the favorite choice over the secured personal loans:
- Borrower despite having imperfect credit history like IVA, arrear, CCJ’s, default or bankruptcy can avail unsecured personal debt.
- Unsecured personal loan is fast to get
- It unwinds the tension of pledging assets as collateral
- It is easiest way to get medium range amount at the earliest
- It gives you freedom to use like managing expenses for home renovation, children’s education, wedding ceremony, holiday trip, debt consolidation etc.
- It is good option for one and all including tenants, homeowners, self employed, non-homeowners and salaried
- The process is comparatively simple and fast
- Less worries for default as your assets are safe
Process of Taking Loan:
The process of getting personal loan is simple; you just need to fill up an online application form provided at lender’s website. Once your application is approved (normally it takes less than 30 minutes), you receive a tailor made loan proposal. Now you have to go though the proposed terms and conditions including the vivid costing factors with freedom to make the doubts clear and negotiate. The often neglected cost factors are late payment fee, processing fee, upfront fee, early payment fee etc. Once you agree with the proposal, your loan amount is sent to your bank account. The repayment period can be settled as per your convenience but it should be kept the shortest possible.
As an eligible applicant, you must be over 18 years’ age and must be a registered UK citizen. You also need to have a proof to establish your repayment capability. The leading direct lenders provide online support to eliminate the hiring of broker.
The Nine Must-to-knows:
- Borrow only if it is planned, needed and budgeted.
- Borrow as little as possible
- Borrow to repay at the earliest
- ‘Credit card cash loan’ may be cheaper in case you need to borrow less than £5,000
- Use online eligibility calculator to assess your credibility before approaching to direct lenders
- Credit history is important but your regular income decides how much debt you can get at reasonable price
- ‘Representative’ APR means you might not get the loan at the advertised interest rate
- Sometimes, borrowing more is cheaper than borrowing less but be careful
- You can settle the balance debt anytime without paying extra
M&S Bank, Sainsbury’s bank, Zopa, AA, Post Office Money, Hitachi, HSBC and Loan Store etc are the reputed unsecured personal loan lenders in the UK. APR varies at large at different banks and lending stores; therefore, in-depth cost comparison is must to save in future. Although borrowers do their best to get the best personal loan deal, still, there are many ways to reduce the overall cost; for example – deal with genuine lender, be a financially disciplined buyer, limit the expenses, be committed to repay, increase your income, and settle the balance amount with discounts if you can pay earlier.