What are the six steps to finding the best loan?

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With so many options available what is the best loan to go for?

It can be all too easy to get lost with so much information available. Thankfully focusing on 6 key areas can help you to make the right decision.

We discuss the six steps to help you find the best loan.

There is no best loan for everyone

There are lots of loans on the market, and from our extensive research of the market we have summarised the best lenders we have found on our compare loans table.

Though ‘one size does not fit all’, and the option that is best for one person may not be for you, it all depends on your own personal circumstances.

To find the most suitable loan we suggest the following six steps:

1. Look at your credit history

Before you can make any assumptions as to the type of loan you may qualify for, we would suggest that you download your most recent credit report so you can see in detail your credit history, and what is on your file.

We prefer Check My File, as they pull in information from the three credit reference agencies Experian, Equifax and CallCredit; it is the UK’s only multi-agency credit report. On this report from Check My File, ALL information associated with your credit history will be listed.

Please note this is not the case if you download a report from Experian, Equifax or CallCredit, who will only list data from companies they deal with.

If they do not make any of the payments, then recovery action will be taken out against them and you.

Once you’ve downloaded your report, you’ll be able to see the exact status of your credit history, and whether you need to apply for a bad credit loan or not.

2. Find out if you can get a regular personal loan

A regular personal loan will be cheaper than a guarantor loan.

So now that you know your credit history, we would suggest you doing some research, on maybe a well-known loan comparison website to see if you can potentially get a personal loan.

If you cannot proceed to step 3.

3.Determine how much you wish to borrow

Different lenders terms vary on how much you are borrowing.

For example, our smaller loans from £100 to £500 can have significantly higher rates (302% Representative APR) compared to 39.8% – 54.9% Representative APR from the larger loans from £500 to £15,000.

So you need to know the amount that you need to borrow (ensuring of course that you can afford the monthly payments – estimate with our loan calculator).

Once you know how much you are borrowing you now need to know the details required for your guarantor.

4. Is your guarantor a homeowner?

The best value loans are available to those whose guarantor is a homeowner, so it is worth trying to find a loan backer, if possible, who owns their own home.

It is worth noting that there is no requirement for the loan to be secured against your guarantor’s home.

If you can only find someone who is a tenant but has a clean credit file and regular income, then this should still qualify them as suitable.

5. Read up about the different lenders

The best value loans are available to those whose guarantor is a homeowner, so it is worth trying to find a loan backer, if possible, who owns their own home.We have spent quite a bit of time putting together information about many of the lenders, including compiling online reviews.

It is worth reading up about the different lenders so you understand a bit more about the companies behind the loans.

For details on the lenders we work with see our guarantor lenders page.

6. Apply to your preferred lender

Once you have done steps 1 to 5, you should be in a good position to select a lender from whom you would like to get a loan quote.

Please note that on applying from our Loan Apply page, you will not incur any costs, and you are not obligated to take out a loan from that lender.

This process will simply confirm all the costs of that particular loan back to you.

If this looks good, then you simply follow that lenders instructions to complete your full loan application.

For related reading see Why borrowers with bigger debts have just had a credit score boost - The Telegraph. 2015-11-27