How to get a Go Compare loan and other loans that might be easier to get approval for.
How to get a Go Compare loan and other loans that might be easier to get approval for.
We all know Go Compare from their TV ads, the theme tune of the TV ads might be ringing in your ears just thinking of the name, but what sorts of loans do Go Compare offer and are there other loan providers that might have loans that are easier to get or just easier to apply for, well yes there are other types of loan that are easier to get and cheaper too, read on for the full details.
There are two types of loan most commonly available and these are unsecured loans and secured loans, a secured loan will be a loan that is backed by something you own that has value, youíre be lending against this value, a mortgage (loan against your home) and a logbook loan (loan against your car) are two types of secured loan.
Unsecured loans have no security on the loan like the name suggests, this means that the lender has to believe that your pay the money back, unsecured loan types are bank loans (personal loans) and cash loans from payday lenders, the problem with an unsecured loan (one of many problems actually) is that these loans have a high rate of interest (known as APR Average Percentage Rate), the interest is high on unsecured loans because the lender is at greater risk of losing the money that they have lent you.
With a secured loan like a logbook loan if you donít pay the loan back the lender could repossess your car and sell your car to get the money back which they have lent you, the same with a mortgage on your home, with an unsecured loan the lender has no security against the loan, nothing that they could repossess to get their money back, this might sound like a better type of loan because you might be thinking Ďwell, if my loan isnít secured against anything then I canít lose anythingí, the problem with that thinking is that your find it very difficult to get an unsecured loan.
Because an unsecured lender has no security in the loan the lenders will submit your details to a credit reference agency like Experian, the agency will then tell the lender if the borrower has a good credit history or not, you get a good credit history by paying all your bills on time, you get a bad credit history by not paying bills on time or not paying your bills at all, for example if you donít pay your council tax on time the details of late payment or no payment will be passed to a credit reference agency and your credit score will be lowered for late payment.
Or you might have a credit card and made the payment late or a store card and been unable to pay back on time, all these type of late or non-payment issues which are easy to make can cause your credit score to be lowered.
So if your applying for an unsecured loan you will have to have a good credit history to be considered for the loan because the lender will always check with a credit reference agency, but things are worse than that for unsecured borrowers, if you apply for several loans or quotations and a loan application is refused your credit score will be lowered because you have been refused one or more loans, so you have to be sure that you will get the loan before you apply, but itís worse than that because just asking for several quotations and each quotation requiring a credit check can cause your credit score to be lowered for frivolous applications.
To prevent this mayhem Go Compare use Smart Search and other unsecured lenders use similar practices which they call no credit check searches, soft searches, representative APR etc. what all this means is that the lender or broker donít actually submit your loan application to a credit reference agency because that could lower your credit score, so the lender gives you a quotation that they think will be the sort of loan your get if you were to apply, thatís right they guess.
The problem with guessing is that the APR rate might be wrong, or the lender wonít lend you as much as you were hoping for or you canít have the loan for as long as you would like and even then, because the quote was a guess when the lender processes your application you still might get refused and still have your credit score lowered.
Secured loans on the other hand are loans against something of value, in the case of a logbook loan thatís a loan against your car, well your cars V5 certificate of registered keepers to be precise, the V5C document used to be called the cars logbook before the DVLA changed then name, so thatís where logbook loans got their name.
With a loan against your car the lender will be interested in how much your car is worth and will only lend you 80% of your cars value, that means the lender wonít lose money because if you canít or wonít pay the loan back and your car is sold the lender can sell your car to get their money back and the lender only needs to sell your car for 80% of its value, assuring the secured lender always gets their money back.
With a logbook loan your details are checked online when you make an enquiry online, you enter your cars number plate and the details are checked against the DVLA (Driver and Vehicle Licensing Agency), this tells the lender the cars make, model and year of manufacture as well as your name and address as the registered keeper, your cars details are checked against an HPI (Hire Purchase Investigation) database to make sure your car has never been written off by an insurance company and that there are no outstanding loans on your car.
If you bought your car on finance or have taken out a logbook loan already then you canít just take out a logbook loan, you have to take out a debt consolidation logbook loan, a special type of logbook loan that lends you the money against your car to pay off your loan and continue the new loan with the logbook lender, you could use such a loan to get a bigger loan or just to change loan companies because you donít like dealing with the loan company that you have now, also if the new logbook loan has a lower rate of interest (APR) than your old loan your save money too.
Whilst you can get a loan from Go Compare there are plenty other lenders around so you should do as the Go Compare name suggests and compare loan rates, thatís actually easy to do any you donít need a comparison site to do that for you, if you look at any loan quote your see that the quote has an APR figure for its interest rate, the trouble as we have discussed with an unsecured loan is this APR figure might be representative and just a guess so your actually comparing what you think is a low rate than when you get the loan actually turns out to be a high rate of interest, hard to compare when the figures your given on a representative APR are not accurate.
Anyway that aside, how do you compare loan rates, well APR stands for Average Percentage Rate and is a percentage fee charged for interest on the total loan amount, for example and Iíve made up the figures here but if a loan had an APR of 10% and you borrowed £3,000 then 10% of £3,000 is £300, so the total amount of money that you have to pay back is £3,300, so you can see that the lower the APR the cheaper the loan will be.
When you get a logbook loan enquiry online you can change the amount you want to borrow and the loan term, you can borrow up to what your car is worth and second hand car prices are checked against online databases like Parkers or Glasses Guide, the minimum you can borrow is £250 and the maximum you can borrow is £50,000 but it will depend on the price of your car, generally older cars will cost less as they wear out and get tatty, of course if you have a classic car then your car will have gone up in value over the years and not down so your be able to borrow more money.
All cars can be loaned against from BMW, Audi, Jaguar to Ford, Nissan and Toyota, whatever make of car you have will be considered for a loan, your car must be UK registered and that means have a V5 certificate form the DVLA, you yourself donít have to be a British Citizen but your car needs to be! (be UK registered).
You can get a logbook loan for any purpose compare that with Go Compare (excuse the pun) where your see application or enquiry forms that ask you what you want the loan for, there will be general loan categories like home improvement, weddings, debt reconsolidation or holidays but what if you want the loan for something else like a student loan, well you couldnít that with an unsecured loan that doesnít list student loans but with a logbook loan youíre not even asked what you want the loan for, you could get the loan for anything you want and you donít have to tell the logbook lender what you want the money for.
Your be interested to know that logbook loans can be done 100% online or offline, thatís right the loan advisor can visit you in your own home, you can show the advisor your cars paperwork (MOT certificate, road tax, insurance and V5C form) and ask any question you might have about the loan process, if you want the lender to visit you at home then get the online quote form and if the lender your using offers home visits there will be an option on the quote form to arrange a home visit, or of course you can continue with the online application and have the money transferred to your bank account the same day.
Your find logbook loans have high approval rates because the loan is a secured loan lent against your car, this means that the lender is assured of getting their money back and are therefore more likely to approve you for the loan eve if you have poor or bad credit, obviously individual lending criteria is set by each logbook loan lender but there is inherently less risk in a secure loan for the lender than there is in an unsecured loan.
When you take out the loan you donít want to be paying any upfront fees, logbook lenders make their money by charging interest on the loan and not in charging hidden fees or other administrative fees to borrowers, charges to look out for include, search fees, inquiry fees, administration fees, processing fees, you get the idea, logbook loans offer free quotes and free applications, so donít even get a quote from a lender that wants to charge you.
Also watch out for early repayment fees, this may or may not matter to you, if you plan on paying the money back early because you know you have a bonus from work coming or other cash that you might soon have then youíre want to make sure that youíre not charged a penalty fee, of course if you have no intention of paying back early then you can take no early repayment fees off your checklist.
With a logbook loan online application, you can apply from anywhere in the UK, you donít need to visit the logbook lenders office (unless you want too), you can complete the application online or even have the lender visit you at home.