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Whether you want to renovate your house, consolidate debt or buy a new car, £15,000 can be a game-changing sum of money. But it’s a significant sum for a lender too. If you’ve got good credit, then you can make meaningful savings by comparing the market-leading rates, and if you’ve got bad credit you may be asked to secure the loan against your property.
With a secured loan, you’ll be asked to put forward an asset (usually a property) that the lender can sell to recoup their losses if you don’t pay the loan back. With an unsecured loan, it’s not necessary to put down any collateral.
Lenders typically ask for security when there’s more risk involved – for larger sums, longer terms, lower credit profiles or some combination of these.
Unsecured loans typically apply a fixed rate of interest, meaning borrowers can budget with certainty – knowing their monthly repayment figure will remain the same over the course of the loan, and also knowing in advance what the loan will cost overall. Secured loans, which are effectively second-charge mortgages, usually involve longer loan terms, so lenders won’t be willing to fix for the full loan term but may offer an introductory fixed-rate period.
It’s worth noting that lenders issuing unsecured loans can still take legal action against a borrower to get any money they’re owed, however.
Your available options for a £15,000 loan are likely to based on your credit rating. Lenders tend to be more picky for sums of this size than they do for smaller loans. Even if the most favourable terms are out of reach, there are a few providers offering loans of this size to those with bad credit.
Most lenders will be willing to lend out £15,000 without security if you have very good credit, but if you don’t have good credit, then specialist bad credit lenders might still offer you an unsecured loan. These lenders will promote the fact that they look at more than just your credit score when considering your application, but they’ll also hike up the rates to mitigate the risk they’re exposed to – potentially charging upwards of 40% p.a.
In this situation, you do have a couple of other options. You could apply for a guarantor loan – that’s where you apply with a friend or relative (who has good credit) who promises to step in and repay the loan if you don’t. In certain situations, guarantor loans can allow you to access larger loans and lower rates than you might alone, but they still come with painfully high rates – typically around 35-50%.
Alternatively, if you own a home with a mortgage, you could consider using the equity in your property as security. Secured loans could offer rates of around 7-15%, but require very careful consideration. For one thing you’re putting your home on the line, and for another, if you borrow £15,000 at, say, 11% p.a. over 15 years, the length of the loan could make it a false economy. Secured loans are commonly used for debt consolidation, where they can prove smarter than an expensive “stop-gap” loan which doesn’t solve financial problems but just defers them.
Most personal loan contracts forbid borrowers from spending the money on a business. However if you wish to borrow £15,000 to start or grow a small business, there’s a wide selection of business loans (including government-backed loans) available from both standard and specialist lenders.
The market for self-employed loans has grown in recent years, making it easier for self-employed borrowers to access loans of £15,000. Frustratingly, the rates offered are often not as favourable as those offered to employees, who are typically seen by lenders as less of a risk due to their guaranteed income.
Consider each of the following factors when comparing personal loans:
|Interest rate of 5.0% fixed p.a.||Interest rate of 10.0% fixed p.a.||Interest rate of 25.0% fixed p.a.|
|2 year term||£658.07 monthly|
|3 year term||£449.56 monthly|
|5 year term||£283.07 monthly|
It’s not just your income and your credit score that lenders will consider when assessing your creditworthiness. Most will ask what the money is being borrowed for, using your answer to judge how likely you’ll be to pay it back on time, They’ll also want details of your employment status in order to make a judgment about your job security.
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