5 Tips When Applying for a Personal Loan – by Graham Brook

Thursday, 12 May 2016
There are a number of reasons you may need to apply for a personal loan, from covering the costs of a new car that is necessary for work to securing enough financial help to tide you over until payday. As an unsecured loan they have various benefits over secured loans, as the borrower doesn’t have to be a homeowner.

However, this does mean that lenders dealing with personal loans usually offer a lower amount to be borrowed. There are a number of pieces of advice to follow when applying for a personal loan to get the best deal, and you can contact a provider for more details.

Improve Your Credit Rating

Lenders possess the power to approve or deny your application for a personal loan and one thing they take into serious consideration is your credit rating. Therefore it is a good idea to check and improve it if necessary. There are many ways to improve your credit rating, from ensuring you are on the electoral register to cancelling any unused credit cards. Of course paying off all existing repayments due will help as well.

1. Look at Rate Tier Thresholds

In certain cases you can end up repaying less each month for borrowing a higher amount due to the lower interest rates charged for borrowing more money. It is therefore worthwhile checking what the thresholds are. If what you intend to borrow falls just below a lower interest rate, then ask to borrow more and you could cut down on interest repayments.

2. Check Hidden Terms and Conditions

You may think you’ve found the perfect personal loan but it is important you check the fine print. Certain lenders only offer their best rates to existing customers or loyalty card holders, occasionally only if they’ve been a customer for a minimum amount of time. Check to ensure you are eligible first.

3. Consider PPI

Payment Protection Insurance (PPI) has got a lot of negative press due to being mis-sold and many borrowers will want to avoid the added costs it brings with it. It can be useful though, as it is designed to protect borrowers if they fall behind on repayments due to poor health, unemployment or other factors.

4. Shop Around

Finally, don’t apply for too many loans but do shop around. Compare the APRs, repayment periods and any other charges to work out the most cost-effective personal loan for you. Check with your current bank first before looking at third party lenders, as they may offer a cheaper deal. Following these tips should leave you with a safe personal loan that will improve your financial situation.