Getting a personal loan through traditional means can be a gruelling and often demoralising process. You have to spend hours meeting officers who are not always the most welcoming small personal loan seekers. However, technology has changed a lot of this lately and has put more power in the hands of the borrowers.
We now have more choice than ever right at our fingertips and finding a favourable loan has never been easier. Still, the sheer number of options out there might make it difficult. Also, you have to take the steps necessary to make sure that you don’t get taken advantage of. Here’s a practical guide to finding the perfect personal loan online.
Understanding Advertised Interest Rates
The first thing when seeking a personal loan is knowing exactly what to look for. The very first thing is the interest rate. This will ultimately affect how much you can expect to pay in total for your loan.
Things can get tricky when we start looking at the different ways interest rates are presented. For instance, you have your APR, which takes account of all the interests and fees you’ll have to pay and is calculated on an annual basis. Then you have representative APR.
Representative APR is the lowest amount that will be offered to at least 51% of people who apply. Lenders are obligated to show this, as the APR could end up fluctuating based on your actual credit and financial situation.
Another thing you should be looking for is repayment flexibility. Some people would like the idea of being able to pay off the loan faster and making savings in some cases, but that’s not always possible. Not only that, but some will even charge you for doing so, so that’s something you’ll have to consider.
Other Factors to Consider
There are plenty of things that you should be considering before you even start looking for loans. First, you have to check your own eligibility. Request a copy of your credit report from the major companies. Check if there are any anomalies. Then look at your financial situation and your income. Look at how long you’ve been employed. All of this will allow you to see which options would be open to you.
You also have to be careful with the amount you borrow and the length of the loan. You only want to borrow what you actually need, and there are some cases when stretching out your payments might actually be a better choice. So, check your financial situation and see how much you actually feel confident paying per month, even if things take a turn for the worst.
Look at Your Options
When most people think about personal loans, they’re usually thinking about small unsecured loans. These are really the holy grail of personal loans, but are not always the easiest to come by. Your credit score will usually be the main factor considered, so, unless you have a great credit score and steady income, finding one of these might be difficult.
You then have things like secured loans that allow you to borrow against collateral. Those are also an option, but the application process can be more difficult, especially when looking for an online lender. Then there’s the very real possibility of having your assets repossessed. Not only that, but you need to have something of value to offer up in the first place.
You also have alternative loans like payday loans that could be considered. You should consider these lenders if you are not very confident about your credit situation and don’t have assets, but have a steady income and employment history to show for it. If you don’t know where to look, services like Payday UK will connect you with direct lenders UK. They will allow you to get access to not only short-term payday loans but a variety of small loans running from £50 to £5000. They will also allow you to check if you’d have an actual chance of being accepted in 60 seconds without triggering a credit report inquiry.
Beware of Hard Checks
The reason why we mention credit report inquiries is that they could actually have a detrimental effect on your credit score, and make it even harder to get a loan. Repeated inquiries over a short period of time could be a sign of over reliance on credit or desperation, both of which will be seen as a negative for lenders. So, if possible, make sure that you only apply for a loan you’re confident you’re going to get and use soft checks as much as possible.
If you follow these few simple tips, you should be able to find a great personal loan online. If you can’t, you at least won’t make matters worse for yourself.