Find out how the loan market has changed, and how you can improve your chances of being accepted for a personal or secured loan.
Brits looking to borrow money in recent months have been advised to stay away from personal loans, as high rates meant they were an unaffordable way to gain credit. However, latest research, as reported in the Mirror suggests rates have now dropped.
Although the average rate is 8.6 percent for someone borrowing £7,500 to £15,000, there are some competitive offers on the market which make borrowing these types of sums more affordable than before.
ï Alliance & Leicester ñ If you have good credit history then this offer from Alliance & Leicester provides customers with a loan with 6.7 percent APR variable. If £10,000 is borrowed over 60 months, the total sum payable would be £11,795.98 with monthly repayments of £196.60.
ï Nationwide ñ The same is true for customers who go to Nationwide for a loan as a loan of £10,000 over 60 months, at a representative APR of 6.7 percent, would mean the borrower would pay a total of £11,795.98 over the term.
The research shows however, the cuts have only made borrowing over £7,000 more affordable, whereas for smaller loans in the region of £2,000- £3,000, the interest rates tend to move into double figures with some even pushing 20 percent APR, a money comparison site revealed.
Top Tips to Getting a Loan Secured
It is important your credit rating is good before you apply for a loan, as this way you will be eligible for the better rates, and some providers even refuse to give a loan to some people if their credit rating is bad.
If you do not know what your credit rating is, find out so you can try and improve it if it is not good.
A bad credit rating or one that requires improvement will be one where the person in question has missed payments on bills such as credit cards or other debts for example.
Things like moving job and address frequently can also affect your credit rating, as can other factors such as being unemployed for a long period, or if your details cannot be found on the electoral register.
Who do you Bank With?
The majority of the good loan rates on offer at the moment are only available to existing customers, so those looking to take out a personal loan will probably receive a better offer from their bank or credit card provider.
Bad Credit Rating?
Often people seeking a loan will have a bad credit history and do not have the means, or the time, to improve it.
If you are in this situation, you should know there are loans available for those with a bad credit history, however, be prepared for a higher rate of interest.
If you have a mortgage or a car, then it may be a good idea to secure the loan on one of these financial commitments, as this will help reduce the rate you are offered.
If you secure your loan then you will also be eligible to borrow more money too, and the assessment on your eligibility will be less rigorous.