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Online personal loans – Gaining foothold in the UK credit market

One can find a variety of personal loan products in the market – bad credit loans, business loans, car loans, career development loans, cosmetic surgery loans, debt consolidation loans, education loans, holiday loans, homeowner loans, home improvement loans and wedding loans.

A recent study indicates that secured personal loans have the largest market share in the UK loan bazaar.

This can be attributed to the fact that secured deals offer maximum loan benefits like quick attention, high credit limit (normally between £5,000 and £250,000), competitive low APR (normally 6.7% onwards), flexible payback terms and negotiable clauses – subject to basic credibility parameters like past credit history, DTI ratio and property value.

The above-mentioned benefits can only be availed by homeowners and property owners, because these loans necessities pledging collateral against the loan amount. Secured loans:
• Are suitable for big monetary requirements, as the credit range is quite high
• Are probably the only option for people who have been denied an unsecured loan
• Are most suitable for bad credit holders, as loan benefits are maximum .

Cons of availing personal loans in secured form:
As an alternate form of repayment, collateral protects the lenders investment, i.e., in case of repeated defaults or non-repayment, the lender can take over the pledged collateral to recover his money. Also, a secured loan deal has an additional thing – time-consuming property evaluation procedure, which requires a lot of time.

Growing popularity of online loans:
Another study indicates that the online personal loans are catching up in the UK loan bazaar, as more and more people are opting for loans over the Internet. This can be attributed to:
• Convenient presence of numerous lenders, who make loans more accessible and the entire loaning process very expedient
• Greater transparency in lending rates across the country
• Cheap loans as compared to conventional lending institutions, as their overheads are comparatively less .

Unsecured High Risk Loan

An unsecured high risk loan can be hard to find, and even harder to find is an affordable interest rate, but there are things you can do to better the situation.

When lenders look at applications they decide who to lend to based on how much of a risk they are taking with each applicant that they won’t be repaid. When you have a bad credit history the lender sees this as a pattern, and decides it is riskier to lend to you than other people. If they decide to still lend to you, they raise the interest rates according to how much of a risk they feel they are taking. To ensure approval of your application, and to get offered the best interest rates possible, you want to show the company reasons you are likely to make your payments on time.

Unsecured high risk loans are given largely based on your credit score. Your score is determined based on the information in your credit report. The first thing you can do to better your application is to fix anything you can on the report. If accounts you’ve already paid are still marked open or overdue call the company and keep talking to them until that is fixed. If you have high credit card balances paying these down will also help a lot.

Another thing you can do is offer some form of collateral and apply for a secured loan, instead. In this case if you fail to make payments the company will repossess the item you offered as collateral. This greatly lowers the risk the lender is taking, and you are rewarded with lower interest rates, and an easier time finding approval. Of course, this increases the risk you are taking as well.

Other than doing any of the things stated above, the best thing you can do for your unsecured high risk loan application is play up your strong points. Do you have a steady income? Have you been with your current employer for several years? Do you have a budget plan that shows your expenses, and how you’ll be able to easily afford your monthly payments? These are all things the lenders will be interested in, and will help you. Also, if your credit issues are all around one particular event, like medical bills, divorce, etc, then have a short one or two sentence explanation prepared to tell the lender. You do not want to dwell on this, but companies do want to hear how you came to be in that problem in the past, and why it won’t happen this time.

Once you get funding, remember to make your payments on time. This unsecured high risk loan may be your chance to build up a positive credit history so you’ll have an easier time in the future.