When looking for a credit loan online, be it a short-term loan or payday loans from direct lenders, there is a lot of speculation surrounding what is and isn’t true. We all know that when we browse the web, all isn’t always as it first appears. That’s why we want to debunk credit loan myths, and make sure you can decipher the true from the false, so you can get the most out of your credit loan when you apply.
#1 You’ll always get the advertised APR
APR, or Annual Percentage Rate, is an indication of how much the loan will cost you in terms of payback per year. Often, you’ll see loans advertised as “REP APR”, meaning the representative APR. This is merely an indication of how many people have taken out the loan and received this amount, in the case of REP APR, 51%. Be this as it may, a whole 49% of applicants will not, which is a huge number of people. You should always get a quote from a direct lender, that way, you’ll receive a personalised loan quote based upon your affordability, so you can make a more informed decision.
#2 You need to go to a bank branch and fill out many forms
Most, if not all, credit loans in this day and age can be done online. With the rise of online loan applications, the prices have been driven down, to your benefit. As many lenders compete with one another, you are enabled with the power of choice when it comes to price, rather than accepting the terms of a bank.
#3 Credit loans will damage your credit score
Contrary to popular belief, credit loans will in fact occur. Making loan repayment on time every month will actually improve your credit rating. Those who have never taken out a loan will have a worse credit rating than those who make prompt repayments, due to the evidential repayments you have previously made.
#4 You have to have a good credit history to get a credit loan
Nope, wrong again. This may have been the case in previous years, but things have changed considerably within the last few. Many lenders offer the ability to take out bad credit or guarantor loans, meaning you can have a dependent who makes the payments for you if you are financially unavailable. This in turn will also lower the cost of the loan, as the risk to the lender is minimised, while enabling those who would not previously have the ability to borrow a loan to do so.
#5 The more loans you apply for, the more chance you’ll get accepted
While taking out loans will enhance your credit score, assuming you make timely payments, taking out more loans will not increase your chances of success. Some lenders perform a “hard search” on your credit report, leaving a negative impact on your ability to borrow as it reduces your credit score. It will also make you look like a less stable borrower, as you have applied to many different lenders.