If you’ve got your eye on making a large purchase but you haven’t quite got the savings to cover it, you may have been looking at your lending options. You’ve spent the last many months putting money aside with your aim to buy that new car, finally get around to those home improvements or book that summer holiday of a lifetime. But presently you’ve not quite got to your total just yet or you’ve decided to keep those savings for something else entirely. If this sounds like you, then you’ll want to ensure you are exploring all of your options.
If the value of the loan is higher than something you would normally go for, such as a £20,000 loan, you may have been put off in the past by taking on this commitment. The good news is, just because the loan is a larger value doesn’t mean it will cost you lots more to pay in interest. Here, we’ll explain how you still get a great rate on a higher value loan that works for you.
This is by far the most convenient way to borrow a large value loan as it is unsecured and will benefit from a low-interest rate. There’s a good reason why personal loans are the fastest-growing loan type currently, as they can offer a better option when looking to finance your goals. A key attraction with a personal loan is being able to see upfront exactly what the monthly repayments will be, and the interest charge attached. Being able to see this information completely before signing on the dotted line ensures there are no surprises. You’ll be able to budget accordingly and know exactly how long it will take to pay off the loan.
Most personal loans will charge a fixed rate of interest on the amount you want. The reason this is ideal is that you’ll see what the APR percentage is safe in the knowledge it will not change during the loan term. Compare this to a variable rate, such as with a credit card; the interest charge is transparent but can increase as well as decrease throughout the credit term. This can leave it difficult to work out how much you will pay back in total. By far, a personal loan can be the easiest option for its convenience and ability to repay early if your savings can cover it.
Unsecured or Secured?
When looking for high-value loans, you may have become confused over how much you can borrow unsecured before it becomes a secured loan. In general, most secured loans are normally taking out against something you own, for example, a car or property. Because of this, they usually tend to be of high value. However, you can get unsecured borrowing up to £25,000 from many lenders. Anything higher than this would normally have to be secured to a personal asset. The benefit of having the loan unsecured is that if for some reason you struggle to pay the debt, no personal asset will be used to cover it. You do not have the risk of repossession of personal property if you suddenly lost your job for example. This is enough for many to opt for unsecured loans if possible due to less risk for you overall. This, of course, doesn’t mean you can easily miss repayments without worry, as it can still result in late penalty charges and potential legal action taken by the lender.
Why Your Credit Score Plays a Huge Part
One of the most important aspects of applying for a higher value loan is having your finances in good health beforehand. If you aren’t entirely sure how your finances are, you should spend the time to look. You can do this easily by getting in contact with a credit reference agency such as Experian. They will show you what your current credit score is, and from there you can decide to look into more detail. If the score represents a fair to bad score, it will be worth spending the money to see your full credit report. This way you’ll be able to see exactly what other lenders can when assessing your application and also provide context on why your score is ranked that way. You may find there are only a few small things you need to do to improve it. If you know that your credit score is good, you have the affordable disposable income available and are prepared to research into lenders, you’ll find those great rate higher value loans with ease.
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