You would probably prefer not to be in a situation where you have to consider a loan. Being debt-free is something to strive for. Life, however, treats us differently at times.
If you consider a loan and you have a credit card, you may use your credit card facility as a “loan”. The advantage of using credit cards, and even credit cards for bad credit, is that you will have access to a 56 day interest-free use of the credit, but should you not repay it in full during that time, you will pay the appropriate rates.
Factors that will impact on your eligibility for a loan or access to a facility that allows you to use credit cards for bad credit are being unemployed, having recently changed jobs, being self-employed or having a poor credit history.
You will easily be eligible for a loan if you own property. The loan will be in the form of a mortgage bond and your house will be used to secure the loan.
Shop around for the best deal before deciding which bond to go for. The interest rates vary from company to company and the length of the loan also impacts on the rate.
Make sure that you are fully aware of the terms and conditions of the loan. The lower the amount you want to borrow, the lower the interest rate.
Normally, the lender will look at the following situations when considering a loan for you: your personal circumstances, the equity of your property and your ability to repay the loan.
Unsecured loans, where there is no collateral in the form of property, are available but with higher interest rates. This would work well for small loans.
Having a bad credit history will not be in your favor when applying for a loan. The lender will suspect that you will not repay and you may not qualify for the loan.
If you have a permanent job, finding a loan will be easier. The lender will know that with a steady income, repayment of the loan will not fall away.
Payment Protection Insurance is available to cover a loan if you are worried that you may fail on repayments. This is an additional cost on your monthly budget but could be considered.
In the event that you have a partner who is also employed, it would mean that should you lose your job, there is still an income coming in to the household.
Repayment of a loan and doing so on time are of the utmost importance. This establishes trust and will improve your credit history if you had a bad one. Late payment charges can also be levied.
Payday loans are available for those who wish to borrow money on the short term only i.e. borrowing for an immediate financial difficulty. High interest rates apply.
They have no bearing on your credit rating, but to be eligible for this, you need a steady job. On the plus side, there is no need to discuss your financial situation with any lenders.
Many checking accounts have overdraft facilities, also with high interest rates. If you do not have any of these bank accounts, these avenues will not be open to you.
{ 0 comments }