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I was trying to get a loan for about xxxxx amount in June this year to clear of some debts and use the rest of the money for other things. But, I was keen on low APR. I was not interested in just any loan as it was not desperate situation.
The particular reason for applying for loan was I did expect Bank of England interest rate to go up as American interest rate gone up several times by that time (Honest). Don't ask me when it will go up next. That was my guess for the short term. Because of recent house purchase, and other debts, I was not successful in many applications. My favourite and target to get a loan from Northen Rock, as it has gives most competitive interest rate and flexible terms. The best flexible term from Northen Rock is you will pay far less fine for early repayment compared to any other bank's personal loan. I did not get it. Tried several others online banks and none of the applications were successful. I knew filling and applying for several online applications is never a good idea as it reduces credit rating. But, only one thing is going in the back of my head, "Interest rate will go up".
First thing I checked is Moneysupermarket.com as it verifying some of my basic credit rating with out actually leavening footprint of search on credit file.
It was Cahoots' turn to apply. There is something special about Cahoots' online application. Eg: If I am applying for £15000/-, at one stage of application (there are several steps), with its verification, result will advice you how much it can offer you, say £10500/- , which is great instead of just saying your application is not successful at this time. None of the other online applications I tried have this feature. Either they will say, you will get it or not. Application process was fast too; nobody called me either to verify more details (I am not their current account customer either). After signing agreement, money was in my account in few days.
So, for somebody desperate to get some loan, and do not want to pay high street interest rates, that this is best choice. While, I share my experience in securing personal loan, I will tell more about other applications. Alliance and Leicester's moneybackbank.com, was offering low interest rate on loan. How ever, my application was not successful. But, there is one important term; they will pass on your contact details to other secure loan companies, who offer secure loans with high interest rates if your application is not successful. Later I verified, I could have opted it out. There was small checkbox somewhere in the middle if terms and conditions. Make sure you remove that tick.
My lessons from Personal Loan:
1. Early repayment charge: Banks tend to recover more of your interest repayment in earlier instalment and as the time passes, you will may less interest and more original amount. So for eg., if you would like to pay back whole amount in 3 years time instead of say agreed 5 years, the effective interest rate you paid may be some 5 times more than you originally agreed. So, if there is a possibility to pay early, check this term clearly and do your numbers work. The early repayment charge of 1 or 2 months described in first page do not necessarily reflect the amount of interest you pay. Be careful, if you are taking loan in a high street bank, customer service person/banker will not explain you in detail or give you much time to read and understand.
2. Interest rate: Of course the less the interest rate, the better it is. Verify if it is fixed or variable.
3. Payment Protection: Read the terms and conditions properly and understand them clearly and check if it suits. There may be products in the market to cover all your financial commitments rather than each commitment individually. You may buy this at any time.
4. Express money transfer: Do you really need money that urgently? Verify and remove the tick otherwise, there will charges by banks for some thing around £40/-. It looks nothing for now when you are getting a big loan, but you could by some gift for your loved once.