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There are a few key features you’ll want to consider when comparing loans. To find the best deal, ask yourself these questions:
If you’re comparing any credit products, it won’t be long before you’ll come across the Annual Percentage Rate (APR). This figure is designed to provide an annual summary, taking into account both interest and any mandatory charges to be paid (for example an arrangement fee) over the duration of the loan. All lenders must calculate the APR of their products in the same way and must tell you the APR before you sign an agreement, so for consumers, it can be a handy tool for comparison.
However, bear in mind that lenders are only obliged to award this rate to 51% of those who take out the loan – the other 49% could pay more. That’s why it’s often referred to as the representative APR.
So for personal loans, the APR is relevant but doesn’t tell the whole story. For example, if it’s very low, it means you need a good credit score to get accepted in the first place; if your credit score is less than perfect, you’re likely to get a higher rate than the advertised one. A good eligibility checker should not only tell you how likely you are to be approved for the loan, but also give you an idea of the rate you may be offered.
There is no way to guarantee you’re approved for a personal loan, but giving yourself the best chance at being approved starts with meeting the eligibility criteria set by the lender. To further your chances of being approved, keep the following in mind:
In order to lend responsibly, lenders will need to verify the following:
When you apply for a personal loan online, most lenders can now electronically verify all of these through a credit reference agency (CRA) such as Experian. In this case, you may need to answer some questions that only you would know the answer to, but you won’t have the hassle of having to dig out any ID, bank statements etc. This process won’t affect your credit score (however, the full credit check that normally happens after you hit “apply” has a slight and usually short-lived negative effect).
If you apply in a branch, the old fashioned rules apply. You’ll need to prove your ID and address with separate, acceptable documents, and you may be asked to prove your income (generally through the last two months of payslips and/or bank statements, or if you’re self-employed, an HMRC document confirming your latest tax return calculation). However, the lender will still carry out a credit search and affordability check through a CRA.
A better question is what can’t you use a personal loan for? This type of financing can cover almost any large expense or even consolidate your debt. Lenders will normally ask you what you need the money for, during the application process. Here are some common reasons for taking out a personal loan, plus some situations when a personal loan isn’t suitable.
Finder.com has selected Accepty Technology Ltd to provide details of credit products and whether you may be eligible to get them. Accepty Technology Ltd is authorised and regulated by the Financial Conduct Authority (FRN: 839295). Accepty is acting as a credit broker, not a lender, and may receive a payment from a credit provider if you take out a credit product.
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