Most lenders use a simple calculator to find out how long it will take to pay the full amount in installments, and the resulting APR (Annual Percentage Rate). This is usually one of the first things you will need to do once you decide to borrow money from an official lender.
If you are considering borrowing money, you will need to decide whether to choose a secured or unsecured insurance. Although mentioning anything “unsecured” makes many people uncomfortable when it comes to finances, this method of borrowing is actually the best option for most people.
What’s more, if you do not own your home (i.e. you rent your home) then unsecured borrowing is your only option, because the property is not yours to secure any borrowing from. While secured insurances can be repaid over long periods (several decades like a mortgage), unsecured is the better option when it comes to smaller amounts.
Personal insurances usually range from £500 to £25,000. Eligibility usually depends on your credit rating, however, if you know there are flaws in your credit history, there are lending companies that will consider your application based on personal circumstances alone without a credit check.
In this case, the lending companies will usually require proof of your monthly income to ensure that you are able to make your payments. They may ask for bank statements, pay slips, or speak to your employer directly to see that you work there and receive the salary you declared.
If you know that your lender will check your credit history, it is important to know your standing with the credit bureau. The best way to do this is to use a free site like Clear Score. You will be asked to enter your personal details and answer some security questions, but then you will have access to your credit file at any time.
It pays to be aware of your score, especially if you plan to apply for a mortgage or buy a business in the future. However, this is not all, there are lending companies that will consider your application without a credit check. Look for “poor credit” lenders.
When you use the insurance calculator – whether online or through a bank or lender in person – you will be asked how much you want to borrow. It’s good to take the time to find out. Don’t be tempted to borrow a large amount that you will not be able to repay. The calculator will help you stay within your means.
You may be asked to specify the purpose of the borrowing. This can be anything from moving a house, paying for a wedding, or a reunion. It is important to be clear about the purpose for which you intend to use the money, as this will inform the lender’s decision – although of course no one will check you once the money is in your account!
The calculator will determine the monthly repayments, depending on how much you want to borrow and over time. Personal insurances can take anywhere from six months to six years to pay off – depending on how much you can pay each month.