Depending on the individual’s circumstances, such as income and monthly expenditure, repayments may be spread over a period; this is called the term of the loan. Loans can be helpful for large upfront expenditures such as building improvement costs for your home or purchasing a new car. In addition, they can be used to consolidate multiple borrowings into a single monthly repayment, reducing total monthly interest costs.
There is a requirement to show proof of the annualised percentage rate (APR) on any loan company advertisements. However, these are ‘representative’ as not all who apply for the loan will get given this rate. The individual’s rate is based on the risk factors that the loan company will review before allocating money to be borrowed. However, this review will leave a mark on your profile, and if there are too many marks on your profile accumulated in a short period, this can negatively affect your credit score.
It is recommended that you check your credit score before applying for any personal loan. This is to check if any errors may affect your chance of approval. You can complete a credit check through websites such as ClearScore, Experian, or Money Super Market, all of which will allow you to check your credit report and credit score. If you need a loan but have a bad or no credit history, then you may wish to consider asking someone to be a guarantor.
You can learn more through our “Being a guarantor” section.
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