[ad_1]
Most lenders use a simple calculator to figure out how long it will take you to pay off the full amount in installments, and your resulting APR (annual percentage rate). This is usually one of the first things that you need to do once you have decided to borrow money from an official lender.
If you are considering borrowing money, you need to decide whether to opt for a secured or unsecured loan. Although the mention of anything “unsecured” makes many people uncomfortable when it comes to finance, this method of borrowing is actually the better option for most people.
What’s more, if you don’t own your home (i.e. you rent your home) then your only option is to borrow unsecured, as you don’t own the property to secure a loan. While secured loans can be repaid over a longer period of time (several decades, like a mortgage) unsecured loans are the best option when it comes to smaller amounts.
Personal loans are usually between £500 and £25,000. Eligibility usually depends on your credit rating, however, if you know you have blemishes on your credit record, there are lending companies that will only consider your application on individual circumstances. Without running a credit check.
In this instance, lending companies will usually ask for proof of your monthly income to ensure that you can afford your repayments. They may ask for bank statements, pay slips, or to speak directly with your employer to verify that you work there and receive the salary you declared.
If you know your lender will be checking your credit record, it’s important to know where you stand with the credit bureaus. The best way to do this is to use a free website like Clear Score. You will be asked to enter your personal details and answer some security questions, but then you will have access to your credit file at any time.
Being aware of your score is useful, especially if you plan to apply for a mortgage or buy a business in the future. However, it’s not the be all and end all – there are lending companies that will consider your application without conducting a credit check. Watch out for “bad credit” lenders.
When using a loan calculator – whether online or through your bank or lender – you’ll be asked how much you’d like to borrow. It’s a good idea to spend some time understanding this. Don’t be tempted to borrow a huge amount that you can’t pay back. The calculator will help you live within your means.
You may be asked to state the purpose of your borrowing. This could be anything from paying for house shifting, marriage or consolidation. It’s important to be clear about what you want the money to be used for, as this will inform your lender’s decision – although of course no one will be checking you once the money is in your account!
The calculator will work out what your monthly payment will be, depending on how much you want to borrow and over how long. Personal loans can take anywhere between six months to six years to pay back – depending on how much you can afford to pay per month.
[ad_2]