Ultimate Guide: Loans UK

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If you’re looking to buy a new car, or you want to renovate your home, maybe even take your family on a much needed holiday, but your savings are running a little low. No worries. Take a loan and give your loved ones the experience that will last them a lifetime.

If you’re looking to take up a loan for less than £5,000, consider using a credit card or an overdraft. For larger sums of money and longer payback durations, loans are the way to go.

Types of Loans UK

There are many types of loans available, making it confusing to decide what loans are suited for you. Before you go searching for cheap loans, you need to think about what type of loan you want and for what purpose. There are two main types of loans. These are known as unsecured loans(or personal loans) and secured loans(or homeowner loans).

  • Unsecured Loans

An unsecured loan is when you borrow an amount of money without collateral, meaning the loan isn’t secured against anything you possess. Unsecured loans are useful if you want to clear your credit card or make a large purchase or renovate your house. You can procure this type of loan from a bank or an online lender or even a business.

With unsecured loans, you can borrow up to £25,000, however, there are few lenders that may even give you double that amount. You’ll need to pay back your loan in a timespan of 1-7 years in most cases.

Having a good credit score will help you get the best loan rates on whatever loan you are planning to take up because when an individual is seeking a loan, UK lenders will go through your credit history and credit rating and asses whether or not to give you a loan. They also asses how much money to loan out and how much interest to charge on it. If you have a poor credit score, you could be denied the loan or be offered low amount of loans with high-interest rates.

  • Secured Loans

Secured loans are also known as homeowner loans because the loan is secured against your home or another equally valuable asset in your possession. So, you can’t get a homeowner loan unless you have a house or something of equally high value.

Loan UK lenders will decide the amount you can borrow based on the value of your home. These types of loans go up to £100,000 and span over 25 years.

If you are not able to repay your loan, the lender can repossess your home or the asset secured against the loan you have received, and sell the property to make back the unpaid loan amount.

For those looking to seek a secured loan, it is very important to be 100% sure you will be able to make back the loaned amounts.

Is it Possible to Get a Loan with Bad Credit?

It will be harder for you to get a loan with a good interest rate if you have bad credit, but it doesn’t mean that you won’t be able to get a loan. Even though there aren’t many options available, there are loan UK providers that cater to this specific group of people.

  • Bad Credit Loans

For those with bad credit, a bad credit loan could be just the thing for you. Unfortunately, these loans have higher interest rates and lower credit offered. Yes, they do cost more, but you will have better luck procuring this type of loan over the others. If you do take up a bad credit loan and make sure your repayments are prompt, it will help improve your credit score and maybe even get you out of that bad credit margin.

  • Guarantor Loans

This is another type of loan for those with bad credit. A Guarantor Loan is when a friend or family member agrees to be the guarantor of the loan, meaning that if you have missed a payment, your guarantor will be required to make the payments. Used wisely, these loans can help create a credit history for young or poor people and help them be in a better position to take loans in the future.

APR – Annual Percentage Rate

The Annual Percentage Rate is the percentage of the loan amount that you will be paying as interest and other fees. It’s the extra amount that you will have to pay aside from your loan.

APR is a way of calculating the best loan deals for your specific needs. The APR includes the interest rate and other charges, making it easier to calculate the total extra amount you need to pay back.

If you have compared loans, you’ll notice that the best loan UK providers mention an APR against their loans. However, not everyone will receive the same rate. This is again, based on your credit score and credit history.

Creditspring Loan UK

Creditspring is a loan provider designed based on the needs of people residing in the United Kingdom. Most of who are tired of the existing credit products and solutions. Creditspring has turned the concept of loans upside down by not charging interest to their customers.

You can get two pre-approved no-interest loans per year with a 14-day cool-off period.

And as for the paid membership, there is no interest charged there as well. The only additional payment is your subscription fee.

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