Help To Understand The Loan Market Find The Loan Company Type For You Match Loan Product To Loan Purpose Get No Obligation Free Information
Making the decision that you wish to raise some money through a loan is only the first step in getting the money that you want to finish your project, make that special purchase or sort out your finances. The next two choices are critical to raising the funds or indeed actually getting the money in the first place, those are; `Which Loan product or type do I need` and then `Which loan companies shall I go to get that loan?`
Types of loan product & associated loan companies. It is easy to get confused between types of loan product and loan purposes. For example someone may say `I want a home improvement loan`. This describes what the loan is going to be used for but does not detail which type of loan they are seeking. Essentially the type of loan is detailing what sort of arrangement, usually known as a credit agreement, you are going to enter into with the loan company for them to lend the money to you. A summary of common types of loan follows;
Pay Day Loan. These are for raising smaller amounts from around £100 to £500 over a very short term, usually just a few weeks. They tend to have very high interest rates in the thousands of percentage, but this is partially because the Annual Percentage Rates are based on credit for a year where as these loans are for only a few weeks. Never the less it is still quite a lot to pay back over such a short term. These can be useful as a one of or rare stop gaps to respond to a very short term unexpected cash shortage. E.G. Your boiler has to be replaced, its winter and you do not get paid for 2 weeks. Even then using savings or other credit facilities you may already have available may well be cheaper. Loan companies providing these are usually found and operate on line, as there are lots of messages out these advertising pay day loans you may want to check out the reputation and age of the company before you go ahead. There are also still a few door to door lenders operating in this market, whereby an agent manages the advances of money to you and the collection of payment process by visiting your property. Once again make careful investigations and verify they are properly licensed if you decide to use this type of loan.
Unsecured Personal Loan Probably still amongst the most common loan type. These are generally aimed at the market for raising from £500 to £7,500, over a period of 2 years for the short term up to a maximum normally around 5 years . Some products go as high as £15,000 but the average generally runs a lot lower. Rates on these loans are a function of the lenders appetite, the size of the loan and how much risk they deem the borrower to be. Often running from 8 or 9%APR for top rated customers up to 40 to 100%APR for those who are deemed higher risk or have poor credit through defaults or missed mortgage or loan payments. Loan purpose tends to be pretty flexible and these are often approved or declined by personal loan companies based on automated decisions using software which compares your credit history to their lending criteria. These can be obtained directly from Banks and Building societies, some of which you will be aware of as they are on the high street but other banks only operate on an online basis. They are also available through specialised investment based lenders some of which advertise directly, many of which are available through personal loan finance brokers, who search their lenders on your behalf to see what loans they have available.
Higher Purchase Perhaps not as popular as in the 1980`s and 1990`s but still a useful option when you are looking to purchase a fairly expensive item and do not have the cash to spare or do not want to tap into saving or use another loan type. Essentially you pay a regular amount each month or week whilst having the benefit of using the item, usually a car or caravan. At the end of the agreement the item is yours to keep. There are many variations on how this sort of loan is operated and the clauses within the agreement can be complex so do further research if you are not sure if this is for you. Loan companies in this area tend to either be partnered with a supplier or manufacturer of the item or the agreement is with the item retailer directly, such as branded car dealerships, motorcycle shops and caravan / static home sales houses.
Homeowner Loans These have also been around for a long time and availability together with pricing offered by loan companies in this arena has generally been related to the housing market. They are also referred to as secured personal loans or home loans as they offer the lender additional security on the money they lend to you by allowing it to be secured against the house. This enables the loan companies offering homeowner loans to consider larger advances over longer periods. Although loan amounts start as low as £3,000 some home loan companies have plans going up to £100,000. Rates range based on circumstances and can be around the 9%APR mark up to usually no more than 29.9%APR for certain scenarios. As mentioned terms can be longer to make the payments more manageable, however it is usually best practice to keep the term as short as you can reasonably afford to keep the total amount of interest paid back down. These loans tend to be used for either home improvement projects or for refinancing via debt consolidation, although they can be used for virtually any purpose. A few loan companies offering homeowner loans will deal with the public directly, most (usually including the direct ones) offer their loan types through finance brokers. These act much like insurance brokers, by sifting through their panel of providers (loan companies) to find a loan that you will qualify for. The finance broker then carries out the processing on your behalf and arranges the money to be released to you. This is one of First Choice Finance`s services.
Credit Cards & Store Cards These also fall under the broader scope of loans. These are known as `revolving credit` within the financial services industry. The nature of the agreement is that the loan company pre-approves you for a credit limit usually from £250 up to £10,000 based on their assessment of you. You then use the credit facility as and when you need it up to the credit limit. Each month you will be expected to pay of at least a minimum amount of any credit outstanding. Interest charges are applied to the credit used and therefore it is good practice to pay down as much of the balance as possible to minimise your interest payments. Some offer interest free periods when you first join although they may charge a percentage of the balance moved over if you are switching from one card to another. Banks and building societies are forerunners as loan companies in the credit card market, no doubt if you have a current account with a bank you will regularly get asked to take out a credit card with then too. However the high street traders do not have exclusivity and some on line institutions also may offer revolving credit. If you are thinking about switching credit card provider beware that some loan companies offering these have multiple brand named cards out there, so it`s a good idea you are not re-applying to the company you are already with. Store cards are usually supplied through a bank or equivalent and rebranded to match the store selling the credit service to you.
To summarise if you`re searching for loan companies, the easiest way to go about it is to learn a bit about the loans market and decide what type of loan you need. There are many available so you should be able to find one to suit your needs. At First Choice Finance we are always happy to discuss your borrowing needs so give us a call or enquire on line and we will look at our products for you. If we cannot help or do not have what you are looking for because we have been around for so long we may well know someone who does.
Homeowner Secured Loans First Choice are tied to certain loan providers.
21.2% APRC variable
Rates from just 11.1%APRC to no more than 59.9%APR for any circumstances. Secured loans are secured on your home.
Mortgages & Remortgages
Borrow £80,000 over 25 years
At 4.6% Variable, £461.95 for
300 months. Total Payable
£138,585. Total Cost Of
Credit £58,585 (incl £1360 fee).
Unsecured Personal Loans REPRESENTATIVE 49.9% APR (VARIABLE)
First Choice are tied to certain unsecured lenders.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. Security is required on
Established In 1988. Company Registration Number 2316399. Authorised & Regulated By The Financial Conduct Authority (FCA). Firm Reference Number 302981. Mortgages & Homeowner Secured Loans Are Secured On Your Home
First Choice Finance is a trading style of First Choice Funding Limited of The Old Courtyard, 103 Buxton Road, High Lane, Stockport, Cheshire. SK6 8DX. Copyright protected 2014.
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