I HAVE A BAD CREDIT RECORD. CAN I STILL GET A LOAN?
Generally, in the case of a secured loan....Yes.....The terms you are offered, however, will vary according to how big a risk you appear to be. If you have CCJ's, Defaults or Mortgage arrears, you can expect to pay a higher rate of interest. The vast majority of lenders use one of two major credit checking companies. These companies hold information on more or less the whole adult population of Britain so if you, or someone at your address has defaulted, got a county court judgement or otherwise had financial problems, then it's going to be on record. This record is invariably searched every time you apply for a loan, H.P., store credit or any other form of borrowing so your history affects the terms you are offered or whether you can obtain a loan at all. The High Street banks and Building Societies will generally not help anyone who has experienced problems in the past few years, however there are many well established and reputable financial services companies who will offer loans based on your present circumstances rather than your history.
HOW SHOULD LOANS BE COMPARED?
There are a number of factors to consider when applying for a loan, however the singular most important factor is the loan A.P.R.
WHAT IS A LOAN A.P.R.?
The A.P.R. on a loan reflects the true cost of a loan to you. It takes into account the loan interest rate and any additional charges making it easier to compare loans when borrowing.
WHAT IF I WANT TO PAY A LOAN OFF EARLY?
If after taking out a loan you wish to repay the loan early you will have to ask the lender for a redemption or early settlement statement. This will show how much you have to pay to redeem the loan. You will not (unless the loan only has a few months to go) be rquired to pay all the loan interest due over the remaining term.The method for calculating the loan settlement figure varies however of loans up to £25,000 the maximum you will repay is calculated using "the rule of 78".(this is a complex calculation governed by the consumer credit act 1974).
WHAT IS A SECURED LOAN?
In simple terms a secured loan gives security to the lender on the loan other than a simple promise to repay the loan. This would normally be a first or second mortgage on the borrowers home.
WHAT IF I ALREADY HAVE A MORTGAGE OR LOAN SECURED ON MY HOME?
It is possible (indeed common) to have more than one mortgage or loan on your property, most lenders will grant a further mortgage or loan if there is sufficient free equity in the property to secure the loan.
IS THERE ANY BENEFIT BY HAVING A SECURED LOAN COMPARED TO AN UNSECURED LOAN?
This depends on the terms of the loan, however in general, many lenders will only grant a loan when security for the loan is provided (in other words it can be easier to obtain a loan with security-particularly in cases of adverse credit) secured loans generally offer more flexibility in loan repayment terms, but most importantly the interest rate on secured loans is generally much lower than unsecured loans.
WHAT IF MY LOAN APPLICATION IS NOT ACCEPTED?
Sometimes a lender may not wish to give you a loan, this may be for a number of reasons, however the lender does not have to tell you exactly why you the loan been refused! you can however ask for the name and address of any credit reference agency used for assessing the loan.
LOAN AND MORTGAGE CREDIT REFERENCE AGENCIES
These are the two agencies used by most lenders when assessing loan and mortgage applications. Equifax plc, credit file advice centre, po box 3001, Glasgow G81 2DT Experian limited, consumer help service, po box 8000, Nottingham, NG1 5GX
