When looking for a loan in the UK, there is an overwhelming choice of Lenders offering varying products at varying rates of interest. It is therefore important to do your homework so that you are not going to be caught out by high monthly payments and poor or unrealistic terms of the loan. If you are interested, you can see a range of loan options through Everyday Loans.
The following 5 options represent my favourites, here in the UK.
Banks / Building Societies
If your credit score is good, both banks and building societies can offer a range of flexible options usually at some of the lower interest rates. Online support is usually offered and people can feel ‘safe’ with a trusted name. They may however not provide a solution for those with poorer credit scores and you may find that they are reluctant to lend to certain groups of people.
Credit Union
A credit union is a local co-operative which you can join. You can save with them and they can also provide their members with loans based on their savings and usually at very competitive interest rates. You do however have to be a member and they usually require that you save with them for a period of time so this option would not be suitable for those looking for an immediate loan.
Credit Cards
Some companies will offer 0% APR on balance transfers and purchases, usually with conditions attached and for a limited time. Some of the card providers will offer cards to those with a limited credit history and to those with poorer credit histories so check various providers and remember to consider the ‘default’ period after the offer has ended. It is easy to run up considerable debt on a credit card. You may also be eligible for a cash advance on a credit card but this is usually chargeable and can be expensive as there can be other fees on top of the interest charge.
Peer-to-Peer Loans
Peer-to-Peer loans are becoming increasingly popular and can offer an attractive solution to many. They are organised online and the person wanting a loan is put in touch with an individual who has money to lend. As the operating costs are lower, interest rates can in some cases be more attractive. Like other methods however, there is no guarantee that you will be accepted as a satisfactory credit check is still part of the process. Payments would usually be made monthly on the interest and the loan amount.
The Bank of Parents and Relatives
This can be a good option for some but tread carefully as many relationships have been damaged beyond repair when money is involved. If you are stuck, you maybe have poor credit or there are other reasons why you cannot approach another lender, this option could be considered. If you do use this option, I would advise that you have everything in writing so as to avoid future misunderstandings, the term of the loan, how much each payment will be, what happens if a payment is missed etc so as to avoid arguments and difficulties down the line.
In general, look for the lowest interest rate, usually quoted as an APR. Pay according to your agreement and if you think that you may have a problem, contact the company immediately.
You could always decide to speak to a broker who will assess your situation and do all of the work for you.
Disclaimer: This content does not necessarily represent the views of IWB.