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Loans: How to get the most for your money

Loans: How to get the most for your money

According to The Office for National Statistics (ONS) the average UK home owes just under £13,000 in debt. It’s a record high which is thought to have been the result of low income rises for several years now. Although startling, it is not necessarily a bad sign – interest rates are at a low rate which is expected to last so it means this financial state is a little more maintainable than in previous years.

Risk

Of course, loans are never the easy way out and should be looked at as solution which is affordable in terms of repayment. We firmly believe in budgeting and saving to be the primary solution to big purchases at The Finance Hero, but we know that there are exceptions – a loan instead of car finance makes a lot of sense and of course, life is never predictable; situations will come up where loans are necessary. So, just what can you do when you need a loan to ensure you’re making the best decision for your financial future?

Income

Before looking into a loan check to see if there’s any way you can increase your earnings first. Is there a job opportunity at work? Is there some extra work you can do or more responsibility you could take on? Even if these options don’t cover the cost that the loan needs to, you’ll be in a more secure position to pay off the loan each month. You’ll also be more attractive to lenders with a larger wage or an amount you can put down against a big purchase.

Financial Obligations

Look at your finances as a whole. Is there any way you can consolidate your debts onto a credit card with no interest for transfers? A comparison site will give you a great overview to see what could be available to you, but bare in mind that it is only an indication and you’d need to speak directly with the company to see what they will do for your specific situation. Could you speak to any current lenders about reducing the amount you pay? When you apply for a loan they will look at any regular financial obligations and take it into their “affordability” calculations. These determine whether you can afford your current deductions plus what they would lend you. If it’s even close to what they would deem as “unaffordable” then they would reject your application.

Credit Score

Your credit score is a huge determiner as to whether a company will lend to you or not. Some companies will allow you to view yours for free and it’s worth checking this before an application as every credit score enquiry that is made about you counts negatively against your credit score. It’s well worth checking if your card company or other credit score company will let you see yours for free as there may be small changes you can make that will improve your score before making a loan application.

Options

Once you’ve done all you can to be in a good financial position then you can begin looking at the optimal company to get your loan through. The best way to do this is to use an independent financial aggregator or loan portal who can look into multiple companies at once.  This way you can weigh up different options without taking out multiple applications, and just as importantly, using much of your time. Check interest rates, term length, and if interest rates will alter throughout the duration of the loan.

If you follow these steps you can make sure that your loan works for you in a way that suits your circumstances and your family.