Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk
The personal loans market is peppered with a variety of legitimate loan providers and unregulated companies. It’s important to work with reputable, regulated, and reliable lenders to ensure that you do not fall victim to a scam. Let’s backtrack a few steps to understand what to look for when applying for cheap personal loans. You may recently have experienced an emergency that requires instant access to money.
Perhaps your bank account balance is depleted or your credit cards are maxed out, and you don’t want to tap your family, friends, or co-workers for a loan. The bank option is always a viable solution, provided you have the necessary paperwork intact, the time, and you meet with all the stringent criteria. Unfortunately, many folks applying for low APR loans don’t have stellar credit, and they cannot produce all the necessary paperwork to satisfy the ever-increasing list of demands by High Street banks and credit unions. When you need money fast, you are probably searching online for cheap personal loans.
You may not know it, but there are many charlatans operating in the personal loans arena. Many of these supposed companies operate under the guise of helping you to find affordable personal loans, whereas they are simply farming a large and untapped market for free information. What does this mean? Simply put, loan providers need to source information on potential customers.
They may enlist the help of marketing agencies which use shifty tactics to try and get you to volunteer your personal information which they then sell to the highest bidders. You may think that by entering your personal information you will be considered for low APR loans – unfortunately that’s not what these websites are all about. First things first: ensure that the website you are applying to actually extends lines of credit to customers.
Your first point of call is the web address of the loan company. It should ideally begin with HTTPS indicating a secure connection. Security is paramount with online loans companies, and that’s why you should always seek out SSL (secure socket layer) and other verification methods. Scam artists do not abide by these rules and regulations – they are only there to get your information – banking account data, ID, personal biographic data etc. and profit off your financial troubles. If the online loans provider does not have a UK-based address – avoid it. It is always important to contact the telephone number of the personal loans provider to ensure that they have a physical location in the UK. Every credible UK lender is fully licensed and regulated by the FCA (Financial Conduct Authority).
Fortunately, government oversight agencies, like Citizens Advice, provide a wealth of information to clients on how to deal with short-term loans providers. It is important that you do a little research to ensure that you don’t get scammed. The interest rate calculator should provide accurate information on the expected repayments over time. Do a quick test to see what the loan amount is, the repayment and whether there are early-repayment penalties.
Another crucial point to bear in mind is the wording used by loan providers. If they state that your credit history is irrelevant, or can be ignored, and that they don’t care whether you are employed or not, they are being dishonest. It is imperative for the lender to be able to validate your creditworthiness when they are issuing a loan to you. The ways they can do this include running a credit check, ensuring that you are gainfully employed through your pay stubs and bank account information, or perhaps requiring surety from a friend or family member.
All online lenders want assurances that you will make good on your instalments. If you default on your payments, your credit score will take a hit, and if you make good on your payments you will be able to improve your credit score accordingly. As always, you must ensure that the lender has full authority to issue cheap personal loans to you. This is easily verified on site with FCA licensing and regulation numbers and then cross-referencing that with the FCA.
Another area of concern is found with lenders that require you to provide a prepaid debit card for approval. If you need to provide payment for a personal loan, you could be dealing with a scammer. This is not accepted practice in the United Kingdom. Prepaid loans are unsecured loans, and as such, no collateral is needed. Consumer watchdog services, such as the Financial Conduct Authority (FCA), list all the rules and regulations that loan providers must abide by. If there are any fees levied on your application for a personal loan, the charges will likely be deducted from the loan amount.
Your credit rating directly affects how much money you can borrow, and as such it is important to understand how it's calculated.Read More