A sum of money that is lent to people by private and government financial institutions or corporations, on a condition that the borrowed sum should be paid back within a given time period, with interest. The sum lent by these financial institutions is referred to as a loan.
While not everyone is eligible for a loan, you can use the loan eligibility checker to determine if you’re eligible for a loan or not.
Types Of Loans:
Though loans are broadly categorized into two categories (Secured and Unsecured), let us look at different kinds of loans that people in general use/require
When you use a physical asset such as a vehicle or a house to secure your loan, in case of a situation where you are not able to pay your loan off. The interest rate depends on your credit score and the asset you are willing to use to secure your loan. In general, secured loans have lower interest rates.
When the financial institution lends you a loan purely on the basis of your credit score and history. This means, if you do not pay your loans back on time, you will not have to part with any of your possessions, but your credit score will be hurt and this will make it difficult for you to take another loan in the future if you needed to.
It is an unsecured, short term loan that is usually lent at a high-interest rate by the financial institution and the condition is that the borrowed amount should be paid back when the borrower gets paid next.
Specifically made for students who are looking to study in universities. The government regulates and then approves these loans, after which they will be paid to you and the university you are accepted in. The university tuition fees are paid to the university and the maintenance loan is given to you, to help you cover the cost of living.
Debt Consolidation Loans:
You can call it is a method of managing your debt, it basically means to accumulate all your existing debts into one. This makes the monthly payments much easier to manage.
When financial institutions lend money to an organization when requested, for business purposes, it’s known as business loans.
Who Is Eligible For A Loan?
Though there are several kinds of loans, not everyone is eligible for it. Financial institutions have their own set of criteria to be met, for you to be eligible for a loan. You can also use the loan eligibility checker to ascertain if you’re eligible for a loan or not. Here are some of the basic criteria that need to be met
- Should be 18 and above
- Should be a UK resident
- Should have a current account with the lender
- Should have a steady income
To check your eligibility for a loan the lenders run a check on your credit background, there are two types of searches which can be implemented
- A Soft Check is when you are able to do a credit check for yourself or the lender checks your credit in order to approve your loan. The best part about soft checks is that they do not affect your credit scored. It is a broadly favored strategy for scans for the borrower as some may have a low credit score and may not think about how to improve credit score UK.
- A hard check is when the lending company checks and reviews your credit history, doing this helps them make a decision about lending the loan to you. These checks do affect your scores.
Loan Eligibility Checker:
Loan Eligibility Checker is an online platform/tool which allows an individual to check their eligibility to get a loan and shows them which type of loan they might be accepted for. There are many benefits of using a loan eligibility checker like
- Once you know which type of loan you eligible to get, it saves you a lot of time in the process
- It does not affect your credit score. There will no mark left in your credit history.
To make the best use of a loan eligibility calculator there are certain requirements that need to be met by the individual who wants to apply for a loan. The few of the required criteria are:
- The loan applicant must be 18 and above
- The applicant must have at least 3 years of address proof
- Should be a resident in the UK
- Should meet the minimum salary requirements
- Required loan amount
- The current credit score of the applicant
After taking in the data provided by you, the loan eligibility calculator will then use that data to determine if you’ re eligible for a loan or not and what type of loan you are eligible for.
This helps you know which lenders are more likely to accept your application, but the results of the loan eligibility checker do not mean you secured the loan or that your application got accepted, it is just pointer as to which loan you most likely to get.
Questions To Ask Yourself Before Applying For A Loan:
Taking a loan to cover the expenses for your needs may seem like a good option but there are always underlying dangers in everything, especially if we are not able to keep our end of the promise/contract things. Here are a few questions that you should ask yourself before taking a loan, as it will help clarify things for you:
- Can an alternative source be used to source the required amount?
- Is it possible for you to repay the loan on a monthly basis without it affecting your daily expenditure?
- Is your credit score up to the mark?
- Is the lender you chose the best for you?
Asking these questions will put things into perspective and make the decision making related to loans relatively easy.