Many of us turn towards personal loans when we are in dire need of some extra funds – that may help us to manage our financial troubles. Maybe because of the ease, convenience and accessibility, we Brits choose this to borrow money. Undoubtedly, these loans are easy to apply for as many lenders offer personal loans online in the UK. In addition to that, it can be used for almost any purpose such as for consolidating the debts, financing a wedding or to fund a weekend getaway.
However, you must also take into consideration the 5 immediate signs that say Personal Loans may not be your cup of tea.
You have a bad credit score
Lenders online do offer bad credit loans to people who do not have a stellar credit score. However, if you have a bad credit score, it’s better not to put your rating at stake by borrowing money. It is not necessary to build your score by availing a personal loan. Keep paying your credit card bills, phone bill, and other necessary bills on time and in full to boost your score rather than opting for a personal loan. Because a credit score is the reflection of your financial behaviour.
The lender is not authorised
You must ensure that the lender or the credit broker you are dealing with is registered by the FCA. To check the authenticity of the lenders or the credit firm, visit the Financial Services Register on the FCA’s website. Also, browse the internet to find reviews by previous customers who had borrowed money from them to know their real-life experience. If a lender is not authorised by the financial regulator – it may be a scam. Avoid offers from such lenders and brokers as you might end up in a financial trap.
No credit check loans offer
If a lender is offering you loans with no credit check – then refrain from opting it. The FCA has made it mandatory for lending agencies to perform a credit check before lending money to a borrower. No credit check loans are illegal and don’t exist. Do not fall for such traps and try to find lenders who perform Eligibility Check for Personal Loans approval. Some lenders also conduct a soft credit check to offer the borrower initial quotes for a loan they have applied for. Soft credit check doesn’t impact your credit score.
No source of income
A regular and steady source of income is a necessity when you are applying for a personal loan. Because a lender needs the repayment of the loan on time and in full. If you do not earn sufficient money to manage your regular expenses by keeping up with the repayments, then you must consider some other alternatives to borrow money rather than choosing a personal loan.
Better credit card rates
While exploring the credit options, if you find offers of a credit card that has a comparatively lower rate of interest than a personal loan – then choose the card over a loan. You may find various deals on cards that have 0% interest as an introductory offer. You have to be in sync with the Terms & Conditions of the card. And if you manage to repay the loan on time, then you will end up saving money by not giving a single penny towards the interest.
If you are sure about the repayments of the loan and you have found a deal online from an FCA registered lender – then you might choose the product for your usage. Moreover, a lot of people choose these short-term loans for the flexibility of the repayment. A borrower is allowed to repay the loan within 12 months from the date of receipt of the loan.