Is It A Good Idea To Borrow An A Personal loan in UK?
Are you in urgent need of money? Unwilling to borrow from your family and friends? Then, undoubtedly, thinking about a personal loan will be a great idea.
It is because only an unsecured personal loans will provide you with the advantage of hassle-free quick borrowing.
What is Personal Loan?
Whatever the cause of need, a personal loan can mitigate all financial problems easily. Whether it is paying long hospital bills or the initial admission fee of a college, each purpose can be solved by applying for this loan. With small repayment tenure, and comparatively low rate of interest borrower finds the ease of borrowing.
Moreover, several lenders turn the whole process a bit easier by eliminating lots of paperwork. Therefore, if you would like to repay the borrowed amount with a fixed monthly repayment option, then a personal loan will be ideal.
Is there any frozen period applied in a personal loan?
Although most of the lenders usually avoid the topic of the frozen period while lending, we will not keep you in the dark. Yes, there is a frozen period in personal loan. The tenure of this period consists of 14 days. This period is counted either since the beginning of signing the loan agreement or getting a copy of that agreement.
By any chance, is there any situation arrives where the borrower may need to cancel the application, even after money credited into the bank account, then the borrower will be given up to 30 days for repayment of the whole amount.
In such cases, a borrower is only charged a few amounts of interest. If the loan amount has been credited 1 month back, then the borrower is liable to pay the interest of only that month. On the other hand, the charges which have been debuted to process the application will be credited back to the borrower’s account.
Another point to remember is that if the purpose of a personal loan you have taken is to repay another loan, it is considered bad credit. Lenders who provide bad credit loans are not easily traceable.
For this reason, borrowers take the help of brokers who act as a medium between the borrower and lender. Now, if you want to foreclose that loan, then the process becomes a bit difficult. Because of very bad credit loans no guarantor no broker agrees to close the loan before repaying at least 6 months of the repayment period.
Is there anything more to look out for before applying for a personal loan?
We heard borrowers often complain about certain things. Such as–
- I am not getting the interest rate as per the advertisement.
- The rate of interest is higher than it was promised initially.
- Even after repaying the desired amount every month, I could not find any changes in my outstanding principle.
- The bad credit score is resisting me from getting lengthy tenure.
- I am unable to get in direct communication with the lender because of the presence of a broker.
To avoid these unwanted scenarios, you should read the terms and conditions properly. Often people made the mistake of overlooking the conditions because of their urgent need. We understand how difficult it is to bear a financial crisis. But, even after undergoing an adverse situation, you should be careful about certain things.
- Don’t forget to check out the actual rate of interest the lender offering you based upon your repayment history.
- Analyse your credit score and make sure you are eligible for the desired amount.
- A bad credit score may lead you to find a lender through a broker. We suggest avoiding the presence of a broker between a borrower and a lender.
- Make sure the lender is providing you with the ease of easy foreclosure.
- Last but not the least, go through the ‘terms and conditions’ column carefully. Because by putting a tick to the check box beside ‘I agree to all the terms and conditions, you close all the possibility of questioning.
- Benefits of borrowing personal loan –
With a little careful step, you can make the best use of a personal loan. Definitely, it has innumerable benefits. Here is mentioned some:
- You may have a credit card, but it has a certain limit. Moreover, if you exhausted 50% of the limit, it becomes impossible to utilise the full amount again until the outstanding amount remains. In that scenario, a personal loan can help you to mitigate the need for cash.
- There is no need to keep any mortgage or anything like that to borrow money. Very often, lenders ask for the mortgage to provide the personal loan. Therefore, there is no need to take an extra burden while applying for an unsecured personal loan.
- Easy repayment option is another convenience of taking a personal loan. By borrowing this type of loan, one can easily repay the uniform amount month on month to pay the total outstanding. For this reason, planning a family budget will become easier.
- There is no floating interest rate applicable to the personal loan. Most of the borrower would like to go for this loan for its static interest rate. A house loan or business loan comes with a floating rate of interest, for which a borrower may need to pay a higher and sometimes lower rate of interest. A personal loan is way better.
- The borrower has the ease of selecting his desired tenure. If he wishes, he can repay the loan within 2 years or carry out the repayment for long 5 years. So there is the flexibility of choosing the tenure. But here, one thing the borrower should remember that the length of the tenure determines how high the interest amount will be.
- Even after not possessing a good credit score, a borrower can be eligible for a personal loan. For very bad credit loans with no broker, charges an additional fee to get them a lender.
Therefore, you can easily understand the benefits of taking a personal loan. As guided, try to keep all the factors in mind before applying for such a loan.