While being debt-free is great and should be a goal for everyone, there are those times where you might need to borrow a bit of money. This could be for anything from education, to a new car or even for the home of your dreams. So while debt can be a major stressor, it is also necessary for some.
However, not all loans and lenders are created equally. In order for you to get the most out of your loan, you need to be aware of what to look for (and look out for). Some loans might be great for your neighbor, but not for you. With that in mind, this article is going to go over a few simple and helpful tips to find the best personal loan for your needs.
Improve Your Credit Score
While there are different ways to evaluate the “best” personal loans, it is generally the loan that will cost you the least over time. While each loan will cost you a different amount, there is something you can do to bring down the cost of every loan from every provider. As you might have guessed, the answer is to improve your credit score. The higher your credit score, the less risky you will appear to lenders and thus, they will give you better rates.
So before you apply for any loans, take a few months and look to improve your credit score. This can be done by paying down any existing debt, keeping utilization low and not missing any payments. The UK has no single universal credit score and instead, each credit reference agency has their own unique system. It is a good idea to know your score from each agency and try to keep it as high as possible to get the best rates and deals.
Consider Online Lenders
While the UK is full of local lenders willing to work with you, you should consider using online loans. Sure, some people might be hesitant due to the ever-present chance of a scam. However, nowadays, there are several completely legitimate online lenders (such as BingoLoans) that are willing to work with a wide range of people.
These online lenders offer simple and fast application processes, and can often get you your money incredibly quick as well. Many can also offer better interest rates due to the fact there is less overhead for them. While there are definitely some online loan scams out there, doing some brief research on any lender you find should ease your worries.
Always Read the Fine Print
While the first thing many people look at when evaluating a loan is the interest rate, that is not the only important thing to consider. You should read the fine print of any agreement to see the other terms that exist. You should ensure you know about all hidden fees, origination fees, prepayment penalties and more. These can drastically change the loan and can turn an attractive loan into one you should avoid.
You should also know the term for the loan. While longer-term loans normally have better interest rates, they are often more expensive in the long run. This is because you will be paying interest for a much longer period. Everyone has different needs out of a loan, so it is up to you to read the fine print to see if they work for you. Also, be sure the loan amount is something you can afford to pay back.
Hopefully, this blog post has been able to help you secure the best loan possible for your own unique needs.