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£10,000 is a lot of money, so most – but not all – lenders will look for a good-to-excellent credit score before they’ll approve you. The good news is there are now plenty of specialist lenders who lend to less than perfect credit histories, but if you’re not careful you could end up paying more interest than you need to – with some lenders charging upwards of 40% annually. We’ll help you understand your options and compare lenders – to find loans you can get approved for, at decent rates.
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The options available to you will depend on your circumstances and why you need the loan. The same goes for the rates offered – the advertised “representative APR” that each lender shouts about is usually only awarded to 51% of their approved customers, so it can be distracting. Let’s take a look at some typical scenarios.
Specialist lenders do offer loans of £10,000 (or more) to people whose credit history isn’t perfect. The challenge is finding a loan you’ll get approved for which doesn’t have a terrible rate.
Crucially, don’t apply to the first lender you come across. Each application involves a credit check and a small negative impact on your credit score. Only hit “apply” when you’re confident the lender will approve you. Most offer an “eligibility checker” to check your likelihood of success without impacting your score.
You could go direct to a specialist lender like Everyday loans for an unsecured personal loan for bad credit, but you might be missing out on better rates.
A more sensible approach is a loan matching service. That’s a fancy way of saying a broker that runs “soft search” credit checks with a number of lenders to see which would approve you. You’ll need to fill in a short online form, but it’s a lot faster than going to multiple lenders individually.Compare pre-approved loans
Applying with a guarantor could help you to access better rates than you might if you applied alone. A guarantor is a friend or relative (with good credit) who promises the lender that they’ll repay the loan if you don’t. Because there’s less risk for the lender, the guarantor loan could be offered at a lower rate.
Finally, if you’re a homeowner, you could leverage the equity in your property. Put simply, offering security (i.e. using your home as collateral) means that a loan represents lower risk to a lender, which normally in turn means lower rates for the borrower. It’s not a decision to be entered into lightly and usually means borrowing over a longer term, but could offer you the most competitive rates. Secured loans are also known as “second charge mortgages”, and are a common choice for debt consolidation.
Lenders realise that this is an expanding market which needs to be served, and as a result, more lenders are offering loans to self-employed applicants. Whatever stage you’re at, if you know your options and how best to go about applying, you’ll have a better chance of having your loan approved.
A £10,000 loan taken out for business purposes is different from one taken out for personal use. Lenders often stipulate that their personal loans are not to be used for business purposes. There are a variety of business loans available, and some are even government-backed – which can mean better rates for borrowers.
You’ll most probably have more options available to you if you’re looking at borrowing £10,000 and you have good credit. You’ll likely be able to apply with a traditional lender such as a bank and enjoy the most competitive rates. You may also find that your current bank offers same-day funding to existing customers, although it usually pays to shop around.
Here are some of the key factors to consider when comparing £10,000 personal loans:
Borrowing over a longer term can bring your monthly repayments down to more affordable levels. It also pushes up the overall cost of the loan however, making it important that you secure a competitive rate.
Whether you’re buying a car, consolidating debt or planning your wedding, here are some examples of £10,000 loans at varying rates and loan terms.
|Interest rate of 5.0% fixed p.a.||Interest rate of 10.0% fixed p.a.||Interest rate of 25.0% fixed p.a.|
|1 year term||£856.07 monthly,
|3 year term||£299.71 monthly,
|5 year term||£188.71 monthly,
Representative example: Borrow £5,000.00 over 3 years at a rate of 49.9% p.a. (fixed). Representative APR 49.9% and total payable £8,782.92 in monthly repayments of £243.97.
Potentially, yes. However the answer depends on factors like how you intend to pay the money back and whether or not you can get a £10,000 credit limit.
Personal loans come in a lump sum – you have a predetermined amount of time to pay them off. By contrast, credit cards are a revolving form of borrowing, so they can theoretically last a lifetime. You borrow what you need, when you need it (subject to a card’s monthly limit) and you have to make at least a minimum monthly payment on your balance. This can tempt borrowers into only paying the minimum and making additional purchases later on, resulting in indefinite debt. Credit card interest rates are generally variable, but cards often come with a promotional fixed-rate introductory period.
Using the wrong credit card could cost you more, because credit cards tend to have higher rates than personal loans. However, a card with a promotional rate of 0% on purchases could be a smart option, depending on your circumstances.
Finally consider any other fees (application, monthly or annual fees), any offers/rewards and the length of the application/approval process before settling on a credit card, personal loan or other form of credit, and don’t forget that you’ll pay a charge each time you withdraw cash on a credit card.
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