Help with loans - frequently asked questions

• Can I borrow money to consolidate existing debts?
• Can I pay the loan back early?
• How do I qualify for the best loan offers?
• How long can I take to repay the loan?
• How long will it take to get the money?
• How much money can I borrow?
• Is it safe to apply for a loan online?
• Should I get payment protection insurance (PPI)?
• Should I take out a homeowner loan or a secured loan?
• What if I have CCJs and credit problems?
• Why should I compare loans?
• Will I be credit checked if I request a loan quote from a comparison site?

Can I borrow money to consolidate existing debts?

Yes, most lenders will allow you to borrow for this purpose, and this type of loan is known as a “consolidation loan”. However, if you’re in financial trouble, be careful not to borrow any more than you need - your credit rating will suffer if you cannot afford the repayments.

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Can I pay the loan back early?

Most lenders will allow you to pay your loan off early, but many will charge you for the privilege. This early redemption fee can be fairly hefty, so if you think there’s a chance you might be able to pay off your loan early, before choosing your loan, you need to check the early repayment charges of different providers.

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How do I qualify for the best loan offers?

The best loans with the lowest interest rates are available to those with an excellent credit rating. To improve your credit rating, make sure you’re registered on the electoral roll and all your bills are paid on time. Check your credit report here.

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How long can I take to repay the loan?

Again, this depends on your lender’s terms and conditions. It also depends on whether your loan is secured or unsecured. With an unsecured loan, the maximum is usually ten years. You can borrow over a longer period with a homeowner loan.

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How long will it take to get the money?

For an unsecured loan, it is possible to get the money transferred straight into your bank or building society account. With a secured loan, the lender will have to perform a check on your house to establish with the Land Registry that you own the house and also to determine if you have an outstanding mortgage or other finance secured on the property. As a result, this check this can take a matter of days or weeks.

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How much money can I borrow?

The amount will depend on your lender and whether you choose to secure the loan on the value of a large asset like your house. The most you can borrow with an unsecured loan is usually £25,000. There is also normally a minimum amount you can borrow - if you need less than £1,000 you might be better off with a credit card. If you need more than £25,000 you will need a homeowner loan that will be secured against your home.

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Is it safe to apply for a loan online?

Yes. Your application will be kept confidential and you will complete online forms on completely secure pages. To check whether a site is secure, check that any page that asks for your details has https:// at the start of its address. If it shows http:// it is not secure.

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Should I get payment protection insurance (PPI)?

Following a huge mis-selling scandal, PPI is largely dismissed as a tarnished product. The regulator came down so hard on various financial institutions that many no longer offer PPI for fear of being accused of mis-selling it. PPI was riddled with exclusions; it didn’t cover the self-employed, contract workers or pre-existing medical conditions that might prevent you from working and many policies were sold to people who were unemployed or retired and therefore didn’t have an income to protect. Read more on PPI and how to claim if you were mis-sold a policy.

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Should I take out a homeowner loan or a secured loan?

There are more risks if you take out a homeowner loan - your house is at risk if you fail to keep up repayments. But, because of the higher risk, you can usually borrow more, borrow for longer and benefit from a lower interest rate.

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What if I have CCJs and credit problems?

If you’ve had credit problems in the past, you’re more likely to have a loan application accepted if you secure it on the value of your house. However, there’s a lot at stake when you enter into a secured loan agreement, and you risk losing your home if you cannot keep up with repayments. In the long term, we would recommend better budgeting until your credit rating has improved.

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Why should I compare loans?

It’s essential to compare loans to ensure you get the best rate available. When comparing loans make sure you look carefully at the APR as well as checking for any additional fees.

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Will I be credit checked if I request a loan quote from a comparison site?

Normally, your credit will be checked for an online application, particularly for an unsecured loan. However, it won’t be checked for a quote with a comparison site until you actually apply for the loan.

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THINK CAREFULLY BEFORE SECURING ANY DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.