Taking a Personal Loan – a beginners guide
Financial emergencies can arise at any point in time. Whether your salary was delayed, or you need money for a medical emergency it never looks good if you have to ask for money from your friends or family members. Applying for a loan from a bank isn’t a viable option either since banks take a very long time to process the application. After the 2008 market crash, banks across the globe had to revise their loan requirements completely. Now banks carry out detailed background checks and make sure that your credit score is good enough before granting a personal loan. Needless to say people who have limited or low incomes are often overlooked.
However, applying to a personal lender isn’t a wise move. Even though the eligibility requirements are not as strict, private lenders generally charge a very high rate of interest. That’s because they aren’t regulated by the Central Bank and as such, don’t have to worry about capping their interest rates at the current market rates.
Apply from a Reputable Bank
You should consider applying for a personal loan from a reputable bank. Banks generally offer personal loans starting from as little as £1,000 and going as high as £25,000. You can visit the bank’s website in order to see the personal loan packages it has to offer. The representative APR is also mentioned on the bank’s website so you can check it out before sending your application. The rate of interest varies depending upon the amount of money you need. As the loan amount increases the interest rate decreases. You should always apply to a reputable bank, so that your application is processed in a timely manner.
Calculate the Repayments
Knowing how much you can afford to repay every month can be very difficult. A prudent borrower always calculates loan payments before applying for the loan. Thankfully, most reputable banks have detailed loan calculators on their websites. You can use the loan repayment calculator in order to see how much money you will have to pay on a monthly basis, as well as the total amount you will have to pay including the interest. Using a loan repayment calculator is important before sending an application, so that you are able to choose the right product.
Terms and Conditions
It’s important to note that all loan amounts are subject to status. Most people think that the terms and conditions mentioned apply for all customers. For instance, the interest rate mentioned on the bank’s website will vary depending upon the financial status of the customer as well as the loan amount that you have chosen. The rate on offer can also vary from the representative APR mentioned.
Consider the duration of the loan amount before filing your application. Do you really want a liability for the next five or six years? You should plan carefully for the future, and talk to the consumer support department to clear your ambiguities before sending your application.