Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk.
Representative Example: Amount of credit: £1,000 for 12 months at £163.94 per month. Total repayment of £1,967.19. Interest: £967.19. Interest rate: 150% pa (fixed). 311.3% APR Representative.

A Personal Loan Guide

At On Stride Financial, we pride ourselves on providing personal loans to individuals in need of extra funds. We have designed a process focused on transparency, and one which provides a straightforward online application. And with variable loan amounts on offer, an On Stride Financial personal loan is all about flexibility.

Our personal loans are unsecured, and available in amounts from £150 to £5,000. Customers can select a loan duration of between six months and three years. Actual loan amount may vary based on application details.

Finding the Right Personal Loan

At its most basic level, a personal loan is money borrowed from a lender, with the intention of being repaid in the future. Personal loans tend to be taken out by those in need of funding for their own personal needs, which can be extraordinarily varied. For many, the need for a personal loan can come in an emergency, such as a tree branch breaking the roof, a flooded cellar or a broken down vehicle. For others, a personal loan may be needed for sudden, unplanned bills. There are individuals who recognise a need to make improvements to their home, and will take out a small personal loan to cover those expenses in the short term, because they’re comfortable paying them back over a longer term. Even mortgages and car loans fall into the category of personal loans.

Details of a Personal Loan

That said, if borrowing funds from someone close to you isn't an option, and you decide to take on a loan, make sure you do your research. Start by taking a good look at your own financial needs, focusing on not just the amount of cash you need to obtain, but the urgency of that need.

While it may feel as though you need to borrow funds immediately, in many cases your need for funding can potentially be pushed back, allowing you enough time to research and select the best option available to you. Ultimately, the most important thing you can do for yourself in acquiring a loan is to consider a variety of lenders and loan types, contrasting your need with what's available to you, and choosing the loan that makes the most sense.

In a majority of cases, the borrower will agree to pay interest on the borrowed funds, at a percentage rate decided by the lender. Interest rates have become part and parcel of all loan types, primarily because of the understanding that lending money today means missing out on the potential for more money tomorrow. If a lender provides a borrower with a £1,000 loan, that’s £1,000 the lender can’t use in a way that might make him more money, for instance through investments. Thus, a lender will create an interest rate that will ensure a return on their funds.

"The borrower will agree to pay interest on the borrowed funds, at a percentage rate decided by the lender."

Another key element to the loan approval process is the agreed-upon repayment terms. Just as with interest rates, these terms can vary a great deal from one lender to the next, often depending on the loan type, the amount being lent and the borrower’s financial history. In a majority of cases, the lender will provide the funds up front, and the borrower will agree to a repayment schedule set by the lender. Often repayments will come in the form of set installment amounts, repaid weekly or monthly.

Types of Personal Loans

An important part of considering a personal loan is gauging the various types of loans, and what will work best for you. The three main types of personal loans — secured, unsecured and guarantor — all offer different features to their lender and borrower:

A secured loan is a personal loan that requires the borrower to commit assets as collateral, should they find themselves unable to repay the full loan amount. Assets can include any property that a lender considers worthy collateral — houses or cars are often considered adequate assets. Should the borrower find themselves unable to repay their loan, the repayment terms allow the lender to take these assets in lieu of payment.

"The three main types of personal loans — secured, unsecured and guarantor..."

On the other hand, an unsecured loan is a personal loan wherein assets are not committed by the borrower. This is an option often considered by individuals in need of funds who can’t claim any key assets. For lenders, the lack of collateral is often countered with an interest rate higher than that found with a secured loan.

Finally, a guarantor loan is a type of unsecured loan in which a lender asks the borrower to include a co-signer or guarantor on the loan. Should the borrower be unable to repay, the loan debt will fall to the guarantor to cover. This is a loan type often used by individuals who lack the credit to take on a more traditional loan.

Applying for a Personal Loan

Just as the details of a personal loan can vary from one lender to the next, the approval process can look very different depending on where you’re applying. In many cases, a lender will require that a potential borrower meet certain basic criteria to apply — for instance, that they’re 18 or older, and can show evidence of employment.

To begin the application process, you must decide the type of loan you want, and if you want to use a bank or an alternative lender. In some cases these decisions may be made for you, depending on the urgency with which you need to receive a loan, or limiting elements such as your credit history or a lack of assets.

"Ensure that the lender you choose is legitimate and trustworthy..."

Once you have settled on your loan type, take some time to research your lending options. Ensure that the lender you choose is legitimate and trustworthy, and that you won’t incur any hidden fees. In some cases, you can use comparison grids to analyse the rates, terms and details of a number of different lenders. Another option for determining the right lender is to employ a loan broker, who can help you consider which lender is best for your unique financial situation.

Once you have determined your lender of choice, familiarise yourself with the lender’s application process and the details of their repayment terms. If you’re concerned that you may not be approved with your lender of choice, be sure to have some backup options. But remember, applying with a number of different lenders could be information that ends up in your credit history.

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