Life can be unpredictable and there’s no way to know what might be thrown at you. You might find yourself needing funds in an instant but don’t have the cash on hand to cover you. A loan can be an effective way of sourcing funds when they’re most needed.
You could use a loan to pay for a variety of things – from fixing your car, making much-needed improvements to your home, or paying for a wedding. It can be tricky to compare loans and find the right one for you, but knowing the ins and outs of loan repayments and loan rates can take a weight off your mind.
When talking to a lender, you might be confused by all the different types of loan that are on offer. Broadly speaking, most loans can be categorised into two different types – unsecured loans (not secured with collateral) and secured loans (secured with collateral).
– Personal Loans. This is where the amount that you are able to borrow is derived from your personal circumstances, such as your income and any monthly expenditure. This is a type of unsecured loan and a lender usually offers up to £25,000 to potential borrowers.
– Homeowner Loan. This is a type of secured loan, so borrowers must own a property to apply for one. The terms for this type of loan can be set for up to twenty five years and the amount that is offered is typically up to £100,000. Borrowers can be at risk of losing their home if repayments are not made.
– Peer-to-Peer Loan. This is where you borrow from someone or a group of people, rather than a lender such as a bank. The interest rate offered will be based on your credit history.
– Guarantor Loan. Some borrowers may have a poor credit score and be unable to apply for loans offered by certain lenders. In this case, someone promises to make up the payments for the loan should you not be able to.
– Bad Credit Loan. This aims to rebuild the low credit score of a person with a poor credit history. Normally this loan involves a higher interest rate than average.
– Car Loan. This is used to purchase a vehicle. Car finance is a loan secured against the collateral of the vehicle so if you do not make monthly payments the car will be repossessed.
– Debt Consolidation Loan. If you have multiple existing debts, this type of loan consolidates them into a single monthly repayment. This can be convenient for keeping track of your finances as you only have to keep track of one payment. However, extending the loan term and combining them into one can increase the interest payable and mean you end up repaying more money than before.
In undertaking a loans comparison, it’s important to consider whether you are likely to be accepted or not. When thinking about applying for a loan, consider these factors:
– Is my credit score too low? If you have a poor credit history, you may find it harder to get accepted for a loan. Any lender will investigate your finances to see how well you manage debt and how likely it is you will repay them.
– Which lender is best for me? Different lenders specialise in different types of loans and working with different borrowers. Compare loans and the rates offered thoroughly, rather than accepting the first deal you find.
– Am I borrowing too much? If you’re trying to borrow more than you can feasibly pay back, lenders are less likely to accept your application.
Knowing the amount that you need to borrow and how much you can feasibly apply for will help you when making a loans comparison.
An unsecured loan will usually allow you to borrow up to £25,000, so if you only need to borrow a few thousand pounds to cover a small cost, a personal loan may well be the best option.
If you need to borrow more, potentially up to £100,000, exploring the options for a secured loan would perhaps fit your needs best. It is important to know before applying for a secured loan whether you can meet the repayment terms. Any asset that has been used to secure the loan, such as your vehicle or property, could be repossessed to cover the costs.
Make sure that you borrow the right amount for your needs. You should be able to comfortably repay the loan and not be pushed into financial difficulty.
When researching loans through a comparison service, you should check all the potential charges that may apply. There may be additional charges applied by the lender, and the APR and interest rate may fluctuate over your repayment term. Bear these costs in mind when deciding how to fit in repayment terms with your monthly outgoings.
Finding the best loan to fit your situation and requirements can be tough. That’s where Bright Loans can help. At Bright Loans, we make sure that you get the best deal every time. Our comparison technology can really put our users right into the driving seat with every financial decision they make.
Our smart comparison technology helps find the right deal that suits your unique situation and makes sure you get the best quotes in the fastest time. Our website is fully secure and entirely independent and impartial – we are not sponsored by any of the major lenders.
We do not sell any user data and will make sure that you never miss a renewal. Our service is simple, easy, and always accessible. The Bright Loans website is there 24 hours a day to compare loans at any time you need to – whether that’s over breakfast, scrolling in the evening, or in the middle of the night.