Compare Loans
It seems like an obvious thing to do: to compare personal loans. And for that reason, it is surprising to see how many people fail to do so.
But let's first talk about personal loans in general. Most people who consider taking out a personal loan simply say they need a loan for such-and-such, when the first step should really be to consider what sort of a credit risk the lender will consider the borrower to be. The difficulty is not so much in getting a secured or unsecured loans, it is in getting one with a reasonable interest rate.
Bad credit? That is not a barrier these days, but when you compare personal loans, you will find that the interest rate charged to people with bad credit tends to be higher. That's reasonable. The lender perceives greater risk and so wants a greater reward, plus a premium to cover losses on loans that are not paid back by other borrowers.
Lenders also know that the worst credit risks are those who are sloppy with their personal financial management. This includes those who fail to compare personal loans. Don't be afraid to let your lender know you are shopping around. Just don't exaggerate the rate you have been offered elsewhere; it will not help your cause and could harm it.
So, what should be the first step in seeking a loan? Should it be to compare personal loans? No, that's the second step. Make sure your credit rating is as good as it can be. To do that, you need to get copies of your credit reports from all of the credit review agencies. These are free, and you have a right to have them sent to you. Equifax is one of the world's largest agencies. In the UK, they can be reached at Equifax, Credit File Advice Centre, PO Box 1140, Bradford, BD1 5US, or phone 0870 010 0583. Two others are Experian (Consumer Help Service, PO Box 8000, Nottingham, NG80 7WF, 0870 241 6212) and Call Credit (PO Box 491, Leeds, LS3 1WZ, 0870 060 1414).
If there are errors in your report, first bring them to the attention of the lenders in question. If you cannot resolve your dispute at that level, take it up with the credit-reporting agency. If the lender agrees there is a mistake (or, worse, that your identity has been stolen), it must be corrected within 30 days. Because loans are normally wanted in a shorter period than that, it is best to review your credit reports at least every six months and not simply when you need to borrow. If you cannot resolve a dispute, you have the right to add a 200-word statement to your file.
When you compare personal loans, you will find personal secured loans at the other end of the interest rate spectrum. A secured loan is any loan for which you are required to post property as security. The lender may sell this property if you do not make loan repayments as agreed. Most often, it will be a building or a vehicle, but there is no particular reason it could not be a stamp collection, rare paintings or jewels.
Secured loans are subject to The Consumer Credit Act 1974. It regulates how the money is lent and covers loans up to £25,000. The lender must provide a consideration period of seven days, but don't expect a warm welcome next time you need money if you simply use this period to find a better deal. Compare personal loans first, before you ever sign on the dotted line.
Once you know what type of loan you need and the type for which you may qualify, check the rates offered by as many lenders as possible, then deal with the one offering the best rates.
