For foreigners living in the UK, expats, or others interested in borrowing money in the United Kingdom there are quite a few things you should know. The standards for applying for a personal loan can be different from those persons from the United States in particular may not be familiar with. We will discuss the qualifications and considerations to make when applying for a personal loan.
To be able to apply for a personal loan in the UK you must meet a number of basic qualifications. The first of these qualifications is standard in many countries, a person applying for a loan must be at least 18 years of age. Secondly you must be a resident of the UK. Residency requirements vary by lending institution but many suggest that you be a resident for a minimum of 3 years in order to establish proper work and payment history to qualify for a loan. The third stipulation is one that Americans or other foreigners may not be familiar with. You generally must have an account with the lending institution or bank that you are borrowing from. This can be a bit of a stumbling block for foreigners and transplants to the UK as they may not have an established relationship with a lending agency.
Income and Credit Score
Lending agencies in the UK are very serious about the financial stability of their borrowers. This means that once you meet the basic qualifications you will need to verify your income. This includes proving that you make enough money to handle all of your expenses, in addition to the terms of repayment for the loan you are applying for.
Apart from income statements, a lender will also inspect your credit score to determine your repayment history and financial status. If you have a history of late or missed payments on any of your debts, a lender reserves the right to deny you outright or change the terms of repayment, including charging higher rates.
The amount a person can borrow and the terms of repayment are not fixed in the UK as they are in many other places. The interest and repayment terms are set based on the personal circumstances on the borrower. This also limits the amount a person may borrow. Typically, borrow amounts range from one thousand, to several thousand euros depending on the ability of the borrow to repay the money. Interest rates are not standardized and may be adjusted based on the borrower’s qualifications.
When borrowing it is often suggested to search for a lender with rates which will allow the debt to be paid off sooner, rather than settling for a longer repayment term and a lower repayment amount. There is a bit more flexibility in the lender market due to the different interest rates between lenders.
What Can You Get A Loan For?
Loans are given for a wide variety of purposes, including purchasing of transportation or debt consolidation. However, lending institutions may not issue a loan for a number of things such as shared property, time shares, or partial purchases. Personal loans are also not applied for business related expenses as those fall into a different category, a business loan category. Loans will also not be offered for any illegal or illicit purchases.
Knowing the appropriate guidelines before you borrow will make you more successful during repayment. It is always advisable to seek out council before you commit to a repayment plan so that you are sure you can handle the added burden of a loan payment.