Loan Companies – Choosing a Loan Finance Company for a Personal Loan or Homeowner loan

Have you asked your bank?

The fastest and easiest way to get a personal loan is to approach your bank. They will normally do it for you within days. Some banks have a system set up where depending on how you manage your bank account, you can automatically qualify or pre-qualify for the bank’s financial products (e.g. loans, credit cards, account upgrade deals, etc).

If you are unable to get a loan from the high street banks because of adverse credit or a bad credit history, contact any of the credit referencing agencies and check your credit record. There maybe mistakes on your credit record that may be messing up your credit score.

Types of Loan Finance Companies

If you’re unable to get a loan from your bank, you may have to contact a loan company or a finance company. There are many different loan companies that may offer to lend you money. Even if you have a history of bad credit, you may find a specialist company that may be able to help. These companies usually specialise in arranging finance or loans for people in special circumstances. Because of the risks to the lender and the extra work involved, their interest rates tend to be very high and they may also charge you other fees such as arrangement fees. Always do your homework and make sure you know what you’re doing and whom you’re dealing with. Speak to the company’s previous or existing customers and find out their experiences with that company.

Some loan companies have been set up by brokers who introduce customers to banks and financial institutions for lending purposes. Others are subsidiaries of banks or insurance companies that specialise in lending money. Loan companies and finance companies are licensed by the Office of Fair Trading (www.oft.gov.uk) and may also be regulated by the Financial Services Authority (www.fsa.gov.uk). Some are members of trade associations and will therefore carry logos.

Most UK loan companies lend money in three ways:

1. Credit or finance agreements (e.g. Hire purchase)
2. Credit cards and store cards
3. Personal loans and cash loans or pay cheque loans

The Easiest way to Compare loans from different Loan Companies and High Street Banks

You can use the finance company’s quoted typical APR (Annual Percentage Rate) to compare different credit and loan offers but always make sure you read, understand and agree to the small print. Generally, the lower the APR, the better the deal for you, so make it a point to shop around so that you can get the best deal. Nowadays, loans from high street banks often tend to be cheaper than most credit offers by stores and other loan companies. If you’re diligent, you may get a very good deal indeed.

Make sure you do your homework when dealing with any finance or loan company that you're not familiar with. Do some research online and make sure that they are licensed to do business in the UK.

Some loan companies provide loans to their customers directly. Other loan companies offer advice but they might charge you for it and it might simply be an offer of another loan.

Loans Companies that offer homeowner loans

If you are a homeowner and you put your home up as security for a loan, you risk losing your home if you cannot keep up the repayments. Think carefully before securing any debts against your home. Secured loans tend to take longer to arrange and they may also cost more than unsecured loans. They often have early repayment penalties, property survey fees, arrangement fees and sometimes broker fees.

You can complain if you think a loans company has treated you unfairly. You can contact the Office of Fair Trading or the finance company’s Trade Association if they belong to one. If a loans company belongs to a trade association (there should be a logo on the company's headed paper or at their website). You can contact the association or your local trading standards department. You can contact the Office of Fair Trading at www.oft.gov.uk

Disclaimer: All information at this site is provided for information purposes only. Do not base any finance related decisions on this information. This is not financial advice and should not be used as such.