0/ If you are not sure how your credit rating looks credit rating offers a
free 30 day view of your experian credit rating to allow you to see what lenders see. If you want to see what the banks
see about you further information here
1/ When a personal loan
application is rejected the company that rejected you often sells your loan application to a 3rd party (so don't
be suprised to receive unexpected phone calls). Beware they are unlikely to offer you the best rate.
2/ Always where possible get a fixed
rate loan as there are examples all over the internet forums of people who have found their loan provider substantially increasing
their interest rate during the loan term.
3/ Always where possible choose an unsecured not secured loan. Do you really want to put your house at risk?
4/ Do not apply too often for credit.
Loan companies will not give you the best rates if they see on your credit report that you have made lots of applications.
5/ Don't apply for a loan to pay
other loans unless you are grouping a number of debts together to simplify your finances. If you are already struggling
to pay your current debts you should be getting professional help. First stop maybe Citizens Advice.
6/ Beware of the loan company trying
to push you PPI.if you want it make sure you read the small print carefully.(a recent survey by which suggested that a third
of borrowers who have taken PPI with a loan would be unable to claim on the policy)
7/ Consider whether the lender allows early repayment with
When comparing loans look at the TOTAL amount you will pay over the term as APR's can be manipulated.
9/ Consider alternatives like Zopa if
you have a good credit record or are between 20-25 years old.
10/ If applying to zopa the funds available are usual highest early in the morning as that
is when funds are credited to lenders accounts. The biggest influx of funds is one working day (late pm) after the 1st
of the month. Cheapest loan rates tend to be am on the 2nd working day after the 1st of month.(so if 1st is
Monday best rates will be had on the Wednesday morning)
11/For short term loans consider stoozing!! rather than a payday loan. What is stoozing? Well it is used to describe the act of borrowing money at an
interest rate of 0%, a rate typically offered by credit card firms as an incentive for new customers. Normally it
is done for financial gain e.g to borrow the funds and then place them in a hight interest account but can be applied
for short term loans too. An example would be the Virgin Credit Card as this currently offers 0% interest for 15 months with 2.98% handling fee. So you could
borrow £5000 against the card for 12 months at 2.98%. Remember though that to stooze you must make sure you can repay
the monthly amount and will be able to pay off full amount at end of 0% term or interest would typically be 15.9%.
12/ Beware of flat rate deals. With
an APR deal you are only paying interest on balance outstanding. e.g £5000 borrowed over 5 years in year 5 you only
pay interest on the £1000 outstanding. On a flat deal you are still paying on the full £5000. So always when comparing
loans ask what will be the total you will repay.
13/ It’s a good idea to consider carefully what kind of repayment period suits you before
going for a personal loan, particularly when considering special deals. A particular five-year deal might be great for
consumers who specifically want a five-year repayment period, but if you initially wanted a three-year repayment period you
might not be saving money by paying interest on your personal loan amount for an extra two years.
Generally speaking the shorter your loan repayment period the better off you’ll be. After all, the longer the
repayment period the more APR charges you will incur. However be honest with yourself on how much you can afford to pay out
each month, because a shorter loan repayment period will entail higher repayments to pay off the debt quicker.
As mentioned if you can afford it this will probably save you money and clear the financial
commitment sooner but that’s only good if you can actually afford the higher repayments. Take a look at the monthly
repayments for different repayment periods for your loan amount and assess what’s going to be best for your circumstances
and how much leeway you wish to give yourself in the event of unforeseen outgoings.
14/ Feel free to download the home budget calculator and loan calculator at the bottom of this page to help you with
15/It is very easy to get hold of your credit report for free. You can get your credit report HERE
16/Before deciding to borrow money it's important to work out whether you'll
be able to repay it in the future.If your spending exceeds or is close to your income already, you should think very carefully
about whether you really can afford to borrow more through a personal loan. Again use the budget calculator to check
17/If things are tough borrowing more might not be the
best course of action and organisations like National Debtline, Shelter and Citizens Advice can offer you free advice.
18/This is probably the most important "loan tip" SHOP AROUND for a personal
loan. A recent study by moneyfacts found on a £5000 loan the difference between cheapest and most expensive was
£25.55 a month which over 3 years is an extra £918.80 you would be paying. It might be less hassle to take
the finance from the car dealership or furniture store, television store etc but don't sign up until you have
shopped around or you might end up with a more expensive loan ans with more restrictive terms and conditions.
19/ Be careful about apply jointly for loans with others who have a bad credit rating. This will adversely affect your own chance of getting the loan and potentially cause
you to be charges a higher rate of interest.