Q: What
is the best way of comparing loans?
A: All factors need consideration when applying for
a loan, but the single most important factor is the loan
A.P.R.
Q: What
is the loan A.P.R ?
A: The A.P.R. on a loan represents the true cost of
a loan to you. The A.P.R takes into account the loan interest
rate and also any extra charges and makes it easier to compare
loans when borrowing.
Q: What
happens if I can afford to pay the loan off earlier than
expected?
A: If
you wish to repay the loan early, you have to ask the lender for
a early settlement statement or a redemption. This will provide
information on how much you have to pay to redeem the loan. You
will not ( unless the loan only has a few months left ) be required
to pay all of the loan interest due over the remaining term. The
method of calculating the loan settlement figures varies, of loans
up to £25,000 the maximum you will repay is calculated using
the rule of 78.( this being a complex calculation governed by
the consumer credit act 1974 ).
Q: I
have bad credit, will I still be able to get a loan?
A: Usually
in the case of a secured loan, provided you have sufficient
equity, yes you can. The
terms being offered, however, will vary according to how greater
a risk you appear to be. If you have CCJ's,
Defaults or Mortgage arrears, you must expect to pay a higher
rate of interest. The vast majority of lenders use one of two
major credit checking companies. If you or someone at your
address has defaulted, or has a county court judgement, then
it will probably be on record. This record is searched every
time you apply for a loan, H.P., store credit or any other
form of borrowing so your history will affect the terms on
offer to you or whether or not you can obtain a loan at all.
Q: What
exactly is a secured loan?
A: A
loan that gives security to the lender on the loan rather
than just a promise to repay the loan. As a rule this would
normally be a first or second mortgage on the borrowers home.
Q: What
happens if I already have a mortgage or home secured loan?
A: You
will find it is possible ( in fact common ) to have more than one
mortgage or loan secured on your property, most lenders will give
a further mortgage or loan providing there is sufficient free equity
in the property to secure the loan.
Q: Are
there any benefits to having a secured loan as opposed to
an unsecured loan?
A: This
is dependent on the terms of the loan, but usually, a lot
of lenders will only grant a loan when security for the loan
is provided ( i.e. it can be easier to obtain a loan when
you offer security - particularly in cases of adverse credit
) in general, secured loans offer more flexibility in loan
repayment terms, but the most important factor has to be
that the interest rate on secured loans is often lower than
unsecured loans.
Q: What
happens if my loan application is declined?
A: Occasionally
a lender may not wish to give you a loan, this could be for any
number of reasons, but the lender does not have to tell you exactly
why you have been refused! You can however ask for the name and
address of any credit reference agency the lender has used for
assessing the loan.
When you apply for credit the lender will request a credit
reference probably from one of the two agencies::
