March 2018 - First 4 Commercial

What to look for in a financial lender

Taking out a loan is a particular kind of stressful, but with this short guide, you should be well on your way to finding a great financial lender for your loan needs.

Look for a financial lender that can offer you options. Not just options for repaying your loan, but also different loan types and various interest rates. When you’re deciding on a loan, you should be able to thoroughly look at all of this information to make an informed choice.

Ask for credentials, associations, and registration numbers. Official financial lenders have to be registered with the Financial Conduct Authority and should have a visible FCA number on their website. For example, first4commercial are also full members of the National Association of Commercial Finance Brokers and are associates with the Association of Bridging Professionals. Our FCA number can be found at the bottom of our website.

Watch out for hidden charges. Loan companies should be upfront about everything that you loan package includes, especially if there are any additional charges to their service. Some lenders have been known to include faster payment charges that they haven’t disclosed to the individual requesting the loan.

Finally, check the financial lender’s reviews. Past customers will have a lot to say about a service, whether it was good or bad. Checking reviews can save you a huge headache in the future, and their great for first-hand experiences from individuals who have actually dealt with the financial lender previously.


Things to consider when looking for a loan

Searching the financial market for the best deal on a loan can take a while, but it’s definitely worth it. When it comes to borrowing from a financial provider, things are never entirely straightforward, so it’s best to shop around for a good deal from a company or lender you can trust.

The first choice you’ll need to make when looking for a loan is “secured” or “unsecured”. A secured loan is only available to homeowners, because the home is often put up against the loan for security. An unsecured loan has no collateral and are widely available. When considering a secured loan, ensure that you have the means to repay the loan, otherwise you could lose your home in the process.

Unsecured loans, like personal loans, are very popular. The maximum you can usually borrow is £25,000, though it’s better to only borrow as much as you need. Secured loans, like bridging loans, have borrowing options up to £100,000 depending on the financial provider.

Here are some things to consider when looking for a loan:

  • Do you own a property? If yes, you may be looking at borrowing using a secure loan.
  • How much do you want to borrow? Smaller amounts can be borrowed using personal loans, but for large loans, you should look at bridging finance.
  • Can you meet the repayments? You could ruin your credit rating with unpaid loan repayments and individuals with low incomes are likely to be rejected.

Take all of this into consideration when looking for a loan.


How to get a personal loan without damaging your credit rating

An estimated 1 in 10 people in the UK have a personal loan. Personal loans, or unsecured loans as they are also known by, are loans that are not secured against an asset (such as your home). They’re usually small loans taken out to meet some personal requirement or to pay for an unexpected financial event. Examples are buying a new car, paying off a holiday, or an unexpected washing machine breakdown.

When the system for personal loans is misused, it can often be damaging for the person who took out the loan. Responsible loan providers should only be willing to lend out an amount of money to an individual if they can pay it back in the allotted time.

Your credit rating is one of the first things that is checked when your loan application is being considered. If you have a bad credit rating and take out a loan you cannot afford to repay, but is approved, you are going to leave a huge dent in your rating for future years to come.

When considering a personal loan, check your credit rating first. Then, shop around for the best interest rates and lenders that offer a good range of options. You’ll want to find a low interest rate, but don’t borrow more than you can afford to repay; definitely don’t max out the loan amount that you can borrow. This is how you avoid ruining your credit rating with a personal loan.


Fixing a denied personal loan application

When a financial provider denies your personal loan application, you start wondering what to do next, and why it was denied at all. The first step to take is to enquire with the lender for a reason why the loan was denied. They aren’t obliged to give you an answer, but most financial lenders will be happy to point out where your application went wrong.

In some cases, it’s simple. Your details are wrong, perhaps a misspelt name or address. A quick fix. In other cases, it can be slightly more serious. Two of the most common reasons that loan applications are denied are that the person applying has bad credit, or that they don’t have enough of an income. In these cases, financial providers are wary of lending because they are concerned the loan might not be repaid.

Applications can be resubmitted, though. If there are any errors in your credit report, you have the right to have those mistakes removed and to resubmit your application. You can use rapid rescoring to have your credit report fixed and your rating adjusted.

Other loans can also be an issue. If you have other loans, try paying those off first before you take out another loan. It’s bad practice to have more than one loan at any time, because you could be getting yourself into a cycle of debt. Also, never use one loan to pay off another.

Finally, where you can, use collateral on your loan. Offer something to of value to secure the loan with a promise of repayment.

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