A personal loan is one of the most popular borrowing solutions available. These loans are ideal if you don’t have any collateral, and most people can borrow up to £25,000 – depending on personal circumstances.
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A personal loan is one of the most popular borrowing solutions available. These loans are ideal if you don’t have any collateral, and most people can borrow up to £25,000 – depending on personal circumstances.
A personal loan is the perfect solution for your needs if you want to raise some cash for a new car, holiday, or need to consolidate your debts.
Believe Money is a brokerage firm specialising in finding cost-effective loans for people from varied backgrounds. Whether you’re worried about your credit history or want a wider choice than mainstream lenders, we have you covered.
What is a personal loan?
Personal loans allow you to borrow a certain amount of money and pay it back with interest. Most loan repayment periods are up to ten years, and the maximum amount a person can borrow is usually £25,000.
However, if you don’t make regular loan repayments and pay back everything in full, you can suffer severe repercussions, including court action.
The main benefit of personal loans is that lenders don’t require any collateral. For example, many providers will turn you down if you don’t own a home because they want security should you default on the payments.
Personal loans (also known as unsecured loans) are available for anyone who passes the checks, regardless of their assets – making them a more convenient solution.
The advantages of personal loans
A personal loan could be beneficial if you need to raise some cash. They’re a convenient solution for people with limited – or no – collateral. Here’s how an unsecured loan can help you.
Flexibility
Unsecured personal loans are known for their flexible terms, including the amount you borrow and duration. For example, some loans have minimum amounts, but you can get a personal loan between £1000 to £25,000.
There’s also more flexibility with the monthly repayments. Secured loans often last for years, but people can choose to pay off their personal loan amount in months, allowing them to get themselves out of debt quickly.
Personal loans have multiple uses
Some loans have specific purposes, such as mortgages for buying homes or car finance. A personal loan is more convenient because you can use it for anything you want – if it has a purpose that will benefit you.
For example, some people use their unsecured personal loans for home renovations or to buy a new car and pay off school fees. You can also use it to consolidate existing borrowing, paying a small amount each month instead of juggling numerous credit cards.
More stability
If you’ve ever had credit cards, you’ll know they’re notoriously challenging to manage – especially when you factor in the interest rates. Many people feel trapped with high-interest rates and uncertainty – but personal loans are different.
Once a lender offers you an unsecured loan, they’ll keep the same payment terms and interest rates, so you’ll know what you need to pay each month.
Simple application process
The loan application process can be lengthy, especially if you want a secured loan. Personal loans don’t require collateral, so they usually go through quicker than other loans, making them a great option if you need money fast.
Many applicants find their money goes through in just a few days, but if you already belong to the bank or building society, you could receive the cash in a few hours.
Is an unsecured loan the right choice for you?
Borrowing money isn’t a decision anyone should enter lightly, and it’s essential to weigh up the pros and cons of unsecured loans before making a final decision.
Yes, these loans can raise some much-needed cash, but they have drawbacks. Before applying for one, it’s crucial to think about the disadvantages of unsecured loans.
Lenders expect you to have a good credit score
All lenders look at a candidate’s credit score before deciding whether to offer them money. The credit check shows whether a candidate has any outstanding debts and helps the lender determine whether they’re a viable person to loan money to.
As the lender expects you to repay your loan, your credit rating is important. While some people with lower credit scores can still get a personal loan, the interest rates will be much higher.
These loans are a commitment
When you receive money from a loan provider, they expect you to make your monthly payments on time. Any loan is a big commitment because you still have to commit to the repayment schedule, even if your circumstances change.
Losing your job or dealing with a drop in household income can cause financial difficulties, and while some lenders are willing to offer a payment holiday, they’ll still expect the money to be paid back in full.
You could face legal action
Unsecured loans don’t use your assets as collateral, but that doesn’t mean there aren’t repercussions if you default on the payments. Lenders will usually issue a warning and raise interest rates if you don’t make a payment.
They also have the right to call in a collection agency and even take you to court if you don’t keep your end of the agreement. A county court judgement will impact your future, especially if you want to buy a home.
Things to consider before you apply for a loan
There’s no doubt that a personal loan can be beneficial if you want to raise some cash, but you should think about the following factors before making a final decision.
Can you afford the monthly repayments?
It’s easy to get carried away when you want to borrow money, but loans come with interest rates, and you will pay more than you borrow. Before jumping into a loan, consider whether you can afford the long-term repayments.
How’s your credit report?
The best loans are available for people with excellent credit scores, so if you want the best interest rates and don’t need the money urgently, it’s worth building your credit score up.
You can do this by paying off your credit cards and ensuring you’re up to date with any other outstanding bills.
Are you using the money for something beneficial?
Entering into an agreement with a loan provider means you’re tied in until you pay off the final amount. You can use the loan for anything, but evaluating whether the money will benefit you is essential.
For example, you might have a poor credit score due to your credit cards, but a debt consolidation loan can help you improve that score by using the money to pay them off.
Using the money for a holiday is fine if you’re willing to get tied into the loan agreement.
Are there any alternatives to unsecured loans?
If you’re unsure whether a personal loan is right for you, other options are available. However, you might not be able to access them if you don’t meet the criteria.
Secured loans
People often turn to a secured loan to borrow more money over an extended period. For example, you could borrow money over ten years or longer, paying monthly instalments throughout the loan period.
Secured loans also allow people to borrow more money as long as they have equity in their homes. However, they’re not beneficial if you only want a small sum of money, and there are hefty early repayment charges.
Also, if you don’t own a home or other collateral of the same value, you won’t be eligible for a secured loan.
Using your overdraft
Most banks offer overdrafts to customers, and they can vary in amount. They might be willing to increase the amount if you have a good relationship with your bank and have rarely used your overdraft before.
Overdrafts are more of a shot term solution because they come with high charges and penalty fees if you go over your allocated amount.
Credit cards
Credit cards can also be helpful if you know how to manage them properly. Getting carried away with numerous credit cards is similar to multiple loans; the repayments and interest amounts can get out of control and create more debt.
Balance transfer cards are ideal for consolidating any existing loan payments, but most providers will turn you down if you have a poor credit history.
How much money can I borrow?
Personal loans work on your personal circumstances, so there’s no set amount that you can borrow. Some people might have a good credit rating and can borrow £25,000, while those with poor credit scores will be offered smaller amounts.
The best way to determine whether you’re eligible for a personal loan is to contact a professional broker. Believe Money is an award-winning mortgage and loans brokerage that supports you throughout the loan application process.
Our professional team works with a diverse range of loan providers and will go out of their way to deliver a solution that suits your needs.
Access to more lenders
Most people who search online for a loan will find mainstream lenders, which often have strict eligibility criteria in place and don’t look at applications on an individual basis.
As a broker, we have access to a range of loan companies, with options available for individuals with poor credit.
Zero upfront fees
When you work with us, you don’t have to worry about paying our brokers any money upfront. We add our fee to your outstanding loan, giving you more financial security and peace of mind.
Headache-free application process
Applying for a loan means you often have to jump through lots of hoops, but we made our application process as easy as possible. Our team will support you when you apply for a loan and help you secure the money you want.
Compare personal loans today with Believe Money
If you’d like to learn more about our brokers, please don’t hesitate to contact our friendly team. We’d love to help you find a loan with an attractive annual percentage rate and favourable monthly repayments.
Please call us or get in touch through our website. We look forward to helping you create a better financial future for yourself.
Why Use Believe Money?
Believe Money is an award-winning finance broker dedicated to offering the best range of affordable loan options. Whatever your circumstances or credit rating, we’re committed to getting you the best secured loan interest rates by searching our entire panel of secured loan providers.
Whatever you need a secured loan for, we’re here to help. Our specialist advisors are available Monday to Friday, so if you need any help please contact us online or give us a call on 01302 591 360.
How It works
Step 1.
Simple, easy application
Step 2.
We search our panel of lenders to find the deal that’s right for you
Step 3.
When you confirm your chosen deal, we get your application moving
Step 4.
The money lands in your bank
account – usually within two weeks
We compare loans from our panel of the UK’s top lenders to get you the best deal.
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