Applying for loans has never been easier - rather than having to trawl the high street in the rain or just go with whatever offer you get from your bank, now you can compare personal loans online from the comfort of your home. Most online loans are personal loans, so they're not secured against your property. This means they rarely exceed £25,000 and usually have a term of 1 - 5 years.
Why choose an online loan?
There are several benefits: being able to apply for a loan online allows you to compare the best deals in your own time, without the pressure of a salesman breathing down your neck.
Many offer an instant decision when you apply online, meaning you won't have to wait several days for confirmation in the post and once accepted you may be able to manage the account online at your own convenience.
Some online products can be cheaper than their high street counterparts because of the lower overheads involved.
There are plenty of companies offering online loans UK high street banks compete with online loan specialists and supermarket banks, giving you plenty of choice. As long as you're comfortable using a computer and you're happy to manage without face to face service, looking online might be the best way to find the loan you need.
What to look for
As important as it is to find a low interest rate, first of all you'll need to look into the following:
How much do you need to borrow?
Knowing the amount you need to borrow will help you to find the right loan and calculate what it will cost you , as lenders offer different rates depending on the sum you need. It makes sense to ensure you don't borrow more than you need, as this will help you to keep your costs down.
Choose the term you repay the loan over
When you compare loans online with monthly payments, most come with a calculator feature that allows you to alter the amount required and the term length. A longer term will lower the amount you'll need to pay monthly, but the total amount of interest payable will go up. Play with the amounts to find a good compromise; ideally go with the shortest term you can, but make sure the monthly payments are affordable.
Fixed or flexible loan?
Many online loans have a fixed interest rate for the entire term, which allows you to repay the same sum each month; this can make organising your finances more straightforward.
You'll also find flexible loans that instead lend you what you need as and when you require it. They will often be linked to your current account and can be operated using internet banking. You choose a maximum loan amount and can then transfer funds to your current account whenever required. However, their interest rates are not fixed, so the amount you pay in total is harder to predict.
Look into the fees
When you work out how much the loan will cost you in total, don't forget to include any early repayment fees, charges for arrears and arrangement fees that might be lurking in the terms and conditions.
How to compare loans online
As with any loan, you'll need to compare more than just the interest rate; the overall cost of the loan is important, as are its features and the amount you'll need to pay each month, which needs to be affordable.
The interest rate will greatly affect the total amount you repay, so make sure you find the best deal you can in our online loan comparison.
The rate you'll see each loan advertised by is called the Annual Percentage Rate (APR). There is no guarantee if you apply for the loan that this will be the rate you end up paying, but lenders have to offer the APR to 51% or more of their applicants. If they see lending to you as a risk, they'll charge a higher rate, but the APR does at least allow you to compare the different loans on offer.
Staying safe online
If you want to manage your loans online UK banks usually have pretty stringent security features to keep you safe from financial harm. Nonetheless, it's always worth being careful; our guide talks you through 5 essential steps to protect your privacy online.