For many people, temporary financial difficulties have a hugely negative impact on everyday life. From essentials like food and bills, to longer term items such as school fees, not having access to funds is a terrible predicament; and one faced by more people in times of economic downturns. For these reasons, people throughout the UK – from all walks of life – see a loan as the best way forward; and there is more choice now than ever before. Also, thanks to the internet, applying can be done without fuss and in a remarkably short time. Read on for our guide to quickly applying for the right loan.
Different types of loans available in the UK
Personal Loan; these are the most common loans in the UK, after mortgages, student loans and vehicle financing. A personal loan is an agreement between you as an individual and your lender; this can be a bank or other financial provider. Personal loans are also called Unsecured Loans. Unlike mortgages and auto finance deals, for instance, personal loans are not secured against physical property, so the lender will not be able to redeem any of the loan’s value by selling anything you own. Because of this, personal loans come at higher interest rates than some other types of loan.
Bank Loan; more commonly used for business purposes, bank loans are agreements between existing bank customers and their bank, for a fixed period of time. These will be secured against property, and incur costs such as administration and insurance fees. Bank loans are not short term solutions; indeed, a charge will result if the loan is paid back before time.
Payday Loan; the subject of much controversy in recent years, payday loans are small in quantity, but come with extremely high interest rates. The term “payday” became popular because people would take out such a loan to tide them over “until payday”. While these have been extremely easy to take out, the size of their interest rates means that the original loan itself is very hard to pay off; rather, customers spend money repaying interest.
Short Term Loan; this type of loan can be very useful for one-off emergencies, such as house repairs which are not covered by insurance. Typically, a short term loan will last for a year; loan amounts can be between £50 and £2,000, and the repayment amount includes interest. This means that the total repayment schedule (usually 12 monthly instalments) is set out when the loan is agreed. Like personal loans, short term loans are unsecured against property, and will, therefore, incur relatively high interest rates (although nothing like those of payday loans).
Which loans can you apply online for?
Which loans you can apply online for will very much depend on your credit history. Organisations such as Experian are used by lenders to access applicants’ financial status; this is carried out automatically when you apply online for a loan. Comparison websites offer the widest range of loan types, although you may have to go through the process of trying each one to see if it’s suitable.
If you have a mortgage, own your home or car, you’ll be able to apply for a secured loan online. If not, there are other options available. Guarantor loans, for example, are where someone you know guarantees the amount of any loan (plus interest) in case you are unable to repay it. Some lenders insist on having a guarantor for applicants with bad credit histories.
You can even apply for payday loans online with many different short term lenders. In fact, short term loans such as payday loans are probably the most common loan to apply for online as they are only quite small in value.
If you are a bank or building society customer, the easiest way to apply for a loan online may be to do so via that company’s website. As long as you have your credentials handy, your bank’s website will be able to tell you almost instantly what loan you can apply for. Alternatively, use a comparison website, which will ask what type of loan you want, and what your credit score is. It’s advisable to do a “soft” credit check on yourself if you don’t know your credit score. There are a number of online companies offering this service for free or for a nominal fee.
When will I receive my money?
Depending on who your loan agreement is with, it is possible to have funds transferred within 15 minutes of approval. (Approval will usually depend on credit score, although secured loans take longer to set up.) A fifteen-minute transfer is usually provided by payday loan companies, which have the highest interest rates. More traditional lenders like banks and building societies will transfer approved funds within 5 working days.