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Personal Loans

Personal loans are one of many types of credit you can borrow from a bank and traditional private lending company. These loans are typically general purpose loans that you can use at your own choice. You may use it to consolidate debt or pay for an unexpected expense or a home improvement project.

Personal loans are unsecured, which means the loan doesn’t require you to use an asset as collateral. If you default on a personal loan, there’s no piece of your property the lender can take as payment for the loan.

The lender doesn’t have any asset to seize if you can’t make loan payments anymore, and this is one of the reasons personal loans are difficult to get. The lender can’t automatically take an asset from you, but it can take other collection actions, including reporting late payments to the credit bureaus, hiring a collection agency, and filing a lawsuit against you.

Personal loans have a fixed amount ranging anywhere from £1,000 to £50,000 depending on the lender, your income, and your credit score. The better your credit rating and higher your income, the more money you can borrow.

Unlike credit cards, personal loans are a one-time loan, wherein you can’t borrow over and over the way you can with a revolving credit card balance. Payments toward the loan reduce the balance but do not open up available credit that you can borrow again. The account is closed once you pay off the loan. If you want to borrow again, you’ll have to reapply for the loan.

Personal loans usually have fixed interest rates that are locked and don’t change for the entire duration of the loan. Similar to the loan amount, interest rates on personal loans are determined based on the borrower’s credit score. The higher your credit score, the lower your interest rate you’ll have.

Lower interest rates mean you pay a lower cost for the loan. There are also personal loans with a variable interest rate, which changes periodically. The drawback of a variable interest rate is that your payments can vary as the interest rate changes. This makes it harder to budget for your loan payments.

Personal loans have fixed repayment period that is stated in months, like 12, 24, 36, 48, and 60 months. If you choose a longer repayment period, you’ll have a lower monthly loan repayment, but they also mean you pay more in interest than if you had a shorter loan term. 

Your interest rate may also be tied to your repayment period. For example, you may have a lower interest rate with shorter repayment periods. Longer repayment periods also mean you’ll be paying on the loan for a longer period of time.

Having an existing loan could be a hindrance for you to get approved for other loans and credit cards. Keep in mind there are loans that have a pre-payment penalty, which charges a fee for paying off your loan early.

Personal loans affect your credit score as most lenders report your loan account details to the credit bureaus. From applying for a loan, which means a new inquiry on your credit report, to how timely you make payments will affect your credit rating. The key to maintaining a good credit score is making on-time loan repayments.

An easier way to take out a personal loan is getting it from a bank you already have an account with. The bank will probably want to know your purpose for the loan and may even have a better loan to meet your needs. It’s important to choose personal loans wisely and remember to only borrow what you can afford to repay.

Personal Loans with Guarantor

A personal loan is a type of unsecured loan, and this means you don’t have to provide any collateral or security. Some lending institutions may ask you to get a guarantor before they accept your personal loan application.

Usually, banks ask for a guarantor only when they aren’t completely comfortable with your financial standing and repayment capability. Loans with a guarantor are ideal for those you have a poor credit rating or no credit record yet.

Having a guarantor for a loan means that the guarantor will have to cover up for defaults in case the borrower is unable to make repayments in time. The guarantor must have a stable income, good credit rating, and must not be financially linked to you such as your spouse.

Being a guarantor is risky because even if the person is a close relative or friend, the guarantor will become liable for your debt and is legally responsible for arranging payments out of his own pocket.

A guarantor is not just a witness or someone who just co-signs the loan, but a person who guarantees that the borrower will repay the loan. The guarantor also promises that he or she will be responsible for the loan if the borrower fails to repay it.

It is imperative that the guarantor understands the risk of the loans as his or her credit score will be affected as well in case of any default or missed payments on his or her part. Everything about the loan must be discussed with the guarantor.

No Guarantor Personal Loans

A no guarantor personal loan is a type of unsecured loan that you can obtain without having someone to guarantee the loan will be repaid. You only need to prove that you are able to repay the loan and provide personal details such as address, employment status, and monthly income. The lender wants to see your ability to pay back the loan.

Not everyone is lucky enough to have someone who is able or willing to be a guarantor, so that’s why this type of loan exists.

A no guarantor personal loan can be beneficial for those who need to pay off debts, get fast access to cash for emergencies, refinance another loan, or make a necessary and much-needed purchase. They are a great option for people who have a bad credit score and don’t have anyone who can be a guarantor for them.

No collateral or guarantee is required. The process of taking out this type of loan can be much faster than going through a bank. If someone has bad credit, then they may be refused from other financing options leaving them a very slim chance for other alternatives.

Bad Credit Personal Loans

You might be eligible for a personal loan with bad credit if other aspects of your personal finances are satisfactory. You can get your funds faster from private and online lenders that you would with a bank or credit union, but the interest rates are slightly higher. Make sure you meet the lender’s requirements before submitting an application. Many allow you to prequalify without it affecting your credit score.

These loans usually have fixed interest rates, so you don’t have to worry about your repayments changing over time. You can use bad credit personal loans for any purposes. You can consider taking a bad credit personal loan to consolidate your existing debt if you have debt on a high-interest credit card. It is a good solution to help you save on interest charges and simplify your repayments. You can use this loan to buy something, urgent vehicle repair, make home renovations, take a vacation or for any other worthwhile purpose.

You can prepay your loan early without a penalty. Some lenders allow you repay your loan ahead of time without charging any additional fees, reducing how much you end up paying in interest.

If you already have poor or bad credit, make sure you have a repayment plan in place before you apply for any loan. Failure to promptly repay the loan on the agreed date can have a further negative impact on your credit score. Avoid applying for multiple loans at the same time because this unfavorable to prospective lenders.

The APR or interest rate you pay can have a significant effect on how much your loan ends up costing. Make sure you compare the rates of different lenders carefully. Fees and other loan features can also vary depending on the lender. Be sure you understand what fees your lender could charge you and other features of the loan before you accept a loan offer.

Instant Personal Loans

These loans are normally unsecured loans, so you don’t have to provide any collateral. Personal loans offered by online lenders are very easy and fast. Usually, you can apply for such loans in minutes. You can expect to find out about your application’s status soon after you’ve completed your application. If you need access to money quickly, you can look for lenders that provide funds on the same day or by the following business day.

These lenders have an online and mobile platform that makes loan application and process quick and easy. No more visiting banks or offices and filling out lengthy forms. You can just download their app or go to their website, relax at home, and fill out an easy application in two minutes or less.

If you’re short on cash and badly need some quick, instant personal loans could be the perfect solution. Many lenders these days are offering instant personal loans, which are available in the blink of an eye. Just decide on how much you need, find a reputable lender, apply for a loan, and the money will be immediately transferred to your bank account.

Personal Loans Direct Lenders

Banks and private lenders have different approval criterion. Consumers are unaware of this, and end up applying to multiple lenders. Take time to understand the details of the loan and choose to approach a direct lender. This will say you some money and time.

If you opt for a broker, you’ll provide your personal and banking details. The broker or affiliate then dispenses your personal information to hundreds of lenders. You’ll have to wait for the lenders to respond. Usually, many lenders will contact you and send you emails that tend to be a bit aggressive and invading already.

If you go to a direct lender, you’ll be working with only one company from beginning to end of your loan application. You don’t want to deal with the headache of wasting your time and no one wants to have their personal information blasted all over the internet.  You’d prefer to deal directly with the companies that actually offer direct installment loans online.  You can also find local companies at physical locations.

Personal Loans in the UK

A personal loan allows you borrow a fixed amount of money over a time period. This loan is usually with a fixed interest rate on your monthly repayments. Unlike a credit card or an overdraft, the borrowing limit is fixed and you are allowed to borrow a higher amount. The best type of loan depends on your personal circumstances. It also depends on how much money you need to borrow and for how long.

Take time to compare personal loans to find out which one works best for you. Before you apply for a loan you should check that you meet the lender’s requirements, which could include your monthly earnings, having a regular job, and having a strong credit rating.

You can take out a personal loan in the United Kingdom from banks, private lenders, credit unions, peer-to-peer lending, and online lenders. There are different lenders who offer a wide range of options for people with different credit ratings and personal circumstances.

The options for personal loans in the UK are quite abundant. You can get a personal loan even with a poor or bad credit. You may get a personal loan with the help of a guarantor as well. Most lenders have the website, providing online transaction for consumers. This gave the consumers convenience and hassle-free loan application and processing.

Take your time to make careful comparisons among different lenders because the interest, fees, and loan features vary from lender to lender. It is not recommended to apply for multiple lenders at once. What you can do is use a loan calculator to see the whole cost of your loan. Apply to direct lenders if you want to save time and money.

 

 

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5 most recent personal loan reviews

Review of Funding Circle

Very quick response and good safety features. Speak to real people once the application has been logged. Very simple to fill out. Would definitely recommend Funding Circle to anyone.

Review posted by Gary Craigs, Dumfries

  • Customer Service
  • Flexibility
  • Ease Of Use
  • Value For Money

Review of Savvy

Really Great Service! Thoroughly recommend! Have dealt with several loan companies & Savvy is definitely the best, easiest, professional & they do exactly what they say unlike many other financial companies that lead you up the garden path!

Review posted by Helen Stern, Sheffield

  • Customer Service
  • Flexibility
  • Ease Of Use
  • Value For Money

Review of Capital One

I have poor credit and really needed the money to pay a court fine or be up against the magistrate again. Really helped me out and I found the charges for the credit very reasonable. Would highly recommend if your in a pinch. Great customer service and went out of their way to help get the loan out the same night I applied. Started 6pm and had money in the bank before 10pm. Great service.

Review posted by Blake Harrington, Margate

  • Customer Service
  • Flexibility
  • Ease Of Use
  • Value For Money
All reviews have been sourced from Trust Pilot to ensure the authenticity of accounts.