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How Loan Companies Decide To Give You A Loan |
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When you apply for a loan, it is not a simple case of the loan company saying 'yes' or 'no' on a whim - it is all down to your credit scoring. Your credit score is a financial assessment of your credit risk - ie. whether a loan company should lend you money or whether they shouldn't, all based on whether you are deemed as a high or low risk.
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Check Your Credit Record Before Applying For A Loan |
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When you apply for any sort of credit, whether it is a credit or store card, a loan or a mortgage for example, you will undergo a credit check by the company who you are approaching for credit.
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How Can I Improve My Chances Of Getting Credit? |
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First of all, get an up-to-date copy of your credit file to see if there are any inaccuracies on it such as a satisfied County Court Judgment (CCJ) that is still showing as unsatisfied or debt that is still showing as outstanding. You can get a copy of your report from one of the credit referencing agencies such as Equifax, Experian or CallCredit PLC for £2.
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When choosing a loan, there are a number of important considerations:low apr, fixed and variable interest rates, loan fees, deferment periods and payment breaks and early settlement penalty.
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Beware Over-Priced Loan Protection! |
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When you take out a loan (or any other credit for that matter) you will be offered the option to also take out insurance to cover your monthly repayments should you be unable to work due to redundancy, sickness or accident. The umbrella term for the type of cover is Payment Protection Insurance - PPI for short. Or, in the case of a loan specifically, PLP - which means "personal loan protection".
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What Kind Of Information Do I Need To Provide On My Loan Application? |
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When applying for a loan, you'll need to provide information to confirm that you are who you say you are; your current and financial debt history; your annual income; plus various other relevant financial information. This is to stop money laundering as well as check your financial suitability for approving an application.
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Early Redemption Penalties - Am I Being Ripped Off? |
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When looking at borrowing money, you'll no doubt be aware of the old saying "Shop around for the best deal". However, while shopping around is the best thing you can do to find the right finance deal, don't just look at the annual percentage rate (APR) on the loan - otherwise you could end up being ripped off by an early redemption penalty.
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