Loans - Looking For Loans: A Quick Guide

Some of us feel we need a little extra help when it comes to affording certain things – from cars to payments on a house.

And with a wide variety of different financial options to suit different spending plans, taking out a loan to help your finances has never been easier.

But what factors should you be on the lookout for when searching for loans?

Firstly, it is advisable to check your credit rating before committing to a loan in order to assess your credit risk, as this will be a factor in determining whether you are eligible to take out a loan.

Before signing up to loans, have a think about whether you need to borrow or not, also double check your credit file to confirm any previous borrowing has been registered as being cleared, and also be wary of any unfamiliar transactions – which could be an indication of identity theft.

There are two basic types of loan available on the market - unsecured loans and secured loans – both of which have different criteria for applications and offer different payment plans depending on your situation.

Unsecured loan plans split payments into monthly instalments, which you pay up until the end of the loan term. Rates are fixed from the outset of the loan term, making it easier to budget in order to meet repayments. Most unsecured plans usually last no longer than 10 years.

It’s best to shop around for deals on this type of loan, as offers vary depending on your credit score, and some providers will only cater for those with particular credit ratings.

Secured loans are those which are only available to homeowners. However for some it may be the only option if they’ve found themselves refused for an unsecured loan.

These plans offer the chance to borrow much more than unsecured loans, with reduced monthly repayments over longer periods of time; however rates are variable and will change depending on interest rates.

As property is secured against this type of loan, there is the added the risk of repossession if you cannot afford to keep up with monthly repayments. It’s advisable to thoroughly assess your situation before committing to such a loan.

If you find yourself refused for one loan, don’t rush out and apply immediately for another. Enquire to the lender to find out the reasons why, and keep an eye on your credit rating as any refusals will show up on your record and could harm any future applications.

When looking for a loan it’s advisable to check all aspects of the deal you want – from APR rates to the small print. If you’re looking to secure Payment Protection Insurance (PPI) it is best to get quotes on loans both with and without PPI.

By doing your research beforehand and making affordable plans, taking out a loan needn’t be as complicated as you think. But it’s always best to be careful and seek advice before committing to such financial plans.