Finding The Best Unsecured Loans In UK
Consumers and businesses in the United Kingdom have access to two types of loans. These are secured and unsecured loans. The former refers to credit facilities that are offered against a security or asset of a similar or greater value. On the other hand, unsecured loans refer to credit facilities that are offered without any collateral requirement. Since creditors take up a great deal of risk when offering these loans, they often charge a higher rate of interest. When looking for unsecured loans UK, consumers should know the following things.
How to Qualify for Unsecured Loans
To qualify for an unsecured credit facility, loan applicants have to convince lenders that they are indeed able to service the loan fullywithout defaulting. Lenders often look at two things, credit history and income.
i) Credit History
This is the credit worthiness of the borrower. A credit report shows previous loans that have been procured by the applicant as well ashow they have been serviced. Any default, bankruptcy or debt management plan (DMP) will show up in the report. Consumers are often given a credit score, which is commensurate of their credit worthiness. Lenders normally quote lower interest rates and offer flexible terms to individuals who have good credit. That said, credit history is the single most important factor that is considered by lenders when processing loan applications.
Loan applicants must have a source of income to qualify for a personal loan. The income can be from self-employment, reputable employer or business-related activities. What lenders look at is consistency in the amount of money coming in every month. The average monthly income of the applicant is what eventually determines the amount of money he or she qualifies for.
Only adults who are over 21 years old can apply for an unsecured loan. Most banks have also set the minimum annual income required to qualify for unsecured loans at five thousand pounds. Unfortunately, if you have been declared bankrupt in the recent years, had an IVA or CCJ, you may not qualify. Applicants must also have an active bank account with a direct debit facility. A building society account is also accepted by most lenders.
Applying for Unsecured Loans
Consumers can apply for a personal unsecured loan online nowadays. Most lenders have websites that make it possible for consumers to apply for loans. This means that you can apply for a loan from the comfort of your home, at the park, at work or while waiting in traffic. Loan processing may take a few days, but you can expect to get the money you applied for in less than a week if you meet all the requirements.
Finding a Lender
In many cases, the best place to get a personal unsecured loan is from your bank. This is because the bank already has a lot of yourpersonal and financial information. Therefore, loan processing and approval will not take a long time. However, if your bank does not have conducive terms and conditions, you may consider looking for a suitable lender. Searching for the best lending company should not be difficult because most lenders have an online presence. A simple Internet search can produce a list of hundreds of potential lenders. You can make your shortlist from the search results. Since interest rates or APR, matter a lot, you can narrow down the search based on the APRs offered by different lenders. Obviously, you want to service the loan comfortably, so you may want to consider looking for firms that have flexible terms.
- Unsecured loans make it possible for consumers to get a large amount of money quickly based on their credit worthiness only.
- Consumers do not need to have any asset or tangible security to qualify for the loan.
- These loans often come with flexible terms and conditions.
- Since no collateral is needed, the application process is very simple.
- There is no appraisal or assessment of collateral, so loan processing takes a very short time.