There are many different reasons to take out a loan. It might be that you’re buying a new home and need to cover the costs that come with a property purchase, your boiler requires urgent repairs, or your car is on its last legs.
Whatever your reason for researching loans, you’ll find that each provider offers different rates. With so many options available, it can be difficult to know where to start. To help, take a look at this guide to obtaining the best rate on your loan.
Your credit score
Before you begin comparing loans, you’ll likely already know that being approved will depend on your current circumstances. It may be that you have an impeccable credit history, in which case more options will be available to you. If, however, you have a poor rating, a bad credit loan could be a good starting point, especially if you’ve been struggling with your credit score. Just make sure you can afford the repayments over the agreed term before taking one out.
There are ways to improve your credit score, though. For instance, registering on the electoral roll provides reassurance to lenders that you live at a particular address and can often have a favourable impact. Also, building your credit history by regularly paying off something like a mobile phone contract can help to show you are managing your debts responsibly.
Another simple way to boost your credit score is to regularly check your report. There are three main credit reference agencies: Experian, Equifax, and TransUnion. You can sign up to free reports from the agencies themselves, as well as several third-party providers Check through your report carefully and look out for anything that looks inaccurate and ensure you contact the credit reference agencies if you spot anything. Even a misspelt street name can affect your score.
What you need
If you feel like your score is in a good place, it’s worth taking the time to work out what you need from a loan. What do you want the loan for? Can you afford to make the repayments? These are key questions, especially if you’re taking out a loan to consolidate another debt or pay off other types of credit. As long as you can make the repayments, a personal loan can work in your favour.
What is APR?
APR stands for the “annual percentage rate” and is intended to help borrowers understand the cost of credit and to compare different lending products. The APR includes the interest rate plus any additional compulsory fees and charges involved. Different providers offer different rates, so you’ll need to do your research and compare the numbers to understand which is cheapest. Bear in mind, however, that APRs are only a guide as to the rate that is offered to most borrowers and the rate you are offered may differ to this.
How to obtain a good deal
Do your research for the best deal. Evaluate the APRs on offer and weigh up which ones are within your budget. Price comparison websites are a useful way of understanding what’s on offer and how costly each option may be.
Don’t apply for lots of loans at once as this can negatively impact your credit score. Also, make sure to keep the loan amount and repayment term consistent for useful comparisons.
Lastly, while the cost of borrowing is naturally important to many borrowers, it’s not the only aspect worth considering. Going for the cheapest loan available is not always the best option, as there may be other features and benefits of a particular product that make it more suitable for you and your particular circumstances.