People often seek personal loans for the variety of reasons like for home improvement, to buy a car, to pay medical bills, for relocating for better earning, to pay expenses during sudden unemployment and for anything else. Although everyone tries to avoid borrowing but today it has become the necessity in the UK because of squeezed earnings and rising living expenses. The high numbers of British people are facing it difficult even to pay the monthly dues pertaining to monthly utility bills and loan installments on the time as a result they are getting bad entries at credit report making the credit score the worse. Borrowing from a regular bank seems the most viable solution but bad credit score closes the door in most of the cases; therefore, you have to turn towards the online direct loan stores claiming for providing instant decision – no fee- same day guaranteed loans for unemployed UK residents.
Importance of APR in Borrowing You Can’t Ignore:
At the start of August 2018, The Bank of England raised the interest rates from 0.5% to 0.75% as was being expected since the months. The strengthened economy, improved employment level, more spending by consumers and the wages rise etc played vital role in decision. The Bank’s priority is to manage the living cost under control. A rise in interest rate in the UK is good for 45 million savers but bad for borrowers having long term loans for bad credit. The reality is more nuanced. On £150,000 mortgage loan, 0.75% rise is expected to increase annual cost up to £224. Almost 9.1 million UK households have mortgage loan. It increases the importance of annual percentage rate in each borrowing irrespective to sources because it is the main factor that decides how much the loan will cost you in total. Most of lending agencies advertise for interest rate but APR is different that goes too high when the actual cost is calculated. So, whatsoever loan type you are going to have, getting the lowest APR should be your very first intention. Can you lower the proposed APR on the required loan?
How to Get The Best Annual Percentage Rate (APR):
Getting the best annual percentage rate is must to cut short the total interest amount that you pay for the loan. Annual percentage rate defines the total interest rate for entire year rather than the monthly interest rate. The leading direct lenders average this interest amount over the loan term. Knowing the accurate APR helps you know the accurate borrowing cost. Here are six simple tips to get the best APR loan:
Know our credit score by using any of credit scoring agencies; it is a free service. Experian and Equifax are the top credit score agencies that are used by most of the lenders in the UK. Credit score ranges from 300 to 850; higher credit score means better prospects for getting the better APR loan.
Shop around yourself and explore all the possible options. Borrowing from regular banks is not the only way; here, low credit score automatically drives in rejection possibilities. Bad credit loan from the credit unions is a good alternative; these unions are conducted by the members to help the members even having bad credit score at lower APR.
Securing the loan with assets like home, vehicle, life insurance policy etc is a good option to reduce the borrowing cost. Most of lenders prefer to secure their lent money; they offer lower annual percentage rate for the secured loans even for the long-term. However, this option carries a negative aspect also. If you fail to pay off the loan on the time, lender can forfeit the mortgaged asset.
Guarantor loan is also a good option to get the low APR loan. It is the best alternative of personal borrowing from the relative. Even a relative or friend not able to lend you the required money can be guarantor to secure your loan. No guarantor loans are costlier than the guarantor loans.
DTI ratio reflects the applicant’s capability to pay back the loan. DTI is assessed by dividing total monthly debt repayment by the average income. DTI ratio denotes how much extra debt can be given to you. Up to 40% DTI ratio makes the prospects better to get low APR loan.
If you have used multiple means to borrow frequently; it goes against you. To get the best APR loan, you should check the loans you hold. Pay back the small amount loans at the earliest with priority. Less loan types that you hold help for low APR.
Always research the lenders dealing in the loan type you want. Opt only for the genuine FCA registered lenders. Online reviews help you judge the service and quality provided for long term loans for bad credit. The credibility is the only parameter to get the best APR loan; improve it by improving credit report and changing your spending habit.