Credit score is one of the key components to borrow loans. When you need loans despite bad credit rating, it entails high rate of interest or loan rejection altogether. However sometimes, you may urgently need additional loans either to stay afloat or to meet temporary cash hassles.
In the last decade, there has been an exponential growth in online lending in the UK. Right from short term unsecured loans to secured homeowner loans; you can find all forms of lending deals online. The Financial Conduct Authority (FCA) is the financial watchdog in the UK and protects consumer interests. Despite the strict vigil, a lot of loan sharks are also active in the FinTech landscape here.
Many times, on a lookout for cheaper deals, we neglect some of the important aspects which could become major financial mistakes. It is thus important to opt for FCA regulated instalment loans for bad credit. It is illegal in the UK to borrow from a lender without lending license.
Here is a quick checklist to ensure legitimacy of the lending deals.
- Identify loan sharks from legitimate loan providers
As important it is to locate a great deal as is to ensure the authenticity of the loan provider. According to FCA directive no loan provider would ever contact you to borrow. The first point of contact should be raised by you. Thus, beware of the loan providers you meet in and around your neighbourhood. Most loan sharks are spread out on public places to search for their victims.
- Check FCA authorisation number
Before you make an official deal online it is important to check FCA authorisation number of the lender. You can always check back the details on official FCA website. Borrow only after you get the match.
- Study website and contact details
You must check the authenticity details on the website of the lender. Always double check the contact details shared so that you do not end up dealing with a fraudulent agency.
- Do not go after verbal promises
Always give more weightage to promises with proof. A lot of lenders offer too-good-to-be-true deals despite bad credit. You must not get blindfolded with such fake promises.
- Ask for loan agreement and verify each promise
You must always check the loan agreement. Do not forget to read the fine prints. Make sure there is mention of each promise on cards.
- Enquire about prepayment charges and cost of late payment
A lot of lenders offer easy deals to borrowers with minimum repayment capacity and levy hefty late payment charges later on. Always enquire about prepayment charges and late payment charges.
- Do not share your credit card details
No legitimate lender or broker would ever ask for your credit card details. Make sure you do not share sensitive details about your plastic cards with any loan provider.
- Do not be lured by no credit check deal
With poor credit history, a lot of borrowers search for no guarantor loans with no credit check. According to the FCA it is illegal to apply for no credit check loan. A credit check is marked in your credit report and helps lender know about their customer’s repayment capacity.
- Use registered brokers’ opinion
Using this handy checklist, you can successfully identify a good deal from a bad one.