First time borrowers: Our top tips & advice for your future
- Ask yourself: Do I really need a loan?
- Analyse your options
- Always check the APR
- Borrow from trusted lenders
- Make sure you can afford the repayments
- Apply for an unsecured personal loan today
Borrowing money for the first time can be daunting. After all, there are lots of ways to access credit, and there are so many terms that you’re likely to be unfamiliar with. So, to help you assess your options as a first-time borrower, we provide you with five of our top tips that will ensure you select an appropriate option and set you up for future success.
Ask yourself: Do I really need a loan?
When you’re looking to borrow money for the first time, it’s important to consider whether you actually need the money that you’re applying for. While we would all love a dream holiday in the Bahamas or a stunning, brand-new car to show off to our friends, if you can’t afford such items, taking a loan out for them isn’t a smart move.
If you’re irresponsible with credit, it’s all too easy to get yourself into debt that will be with you for years. So, before you dive in and look for a loan, make sure that you actually need it and aren’t spending outside of your means.
Analyse your options
As you will find out from your research, there are so many options for first-time borrowers to consider, including:
- Unsecured loans – At Koyo Loans, we offer unsecured personal loans of between £1,500 and £12,000. 24.9% APR Representative. Unsecured loans can be used for a range of purchases and are easy to apply for.
- Secured loans – These loans are secured against assets that you currently own, so they won’t be accessible to all first-time borrowers.
- Guarantor loans – As many first-time borrowers don’t have a credit history, guarantor loans can be an effective way of accessing credit.
- Payday loans – Extremely expensive and only available for small amounts; payday loans are best avoided and will do your credit rating more harm than good in the long run.
The key thing to remember is that there are lots of ways to access credit as a first-time borrower. You may also be eligible for a credit card with your bank, so be sure to do your research before settling on the right loan for your circumstances.
Always check the APR
APR stands for annual percentage rate and is an indication of how much you will pay back on your loan in a calendar year. Some lenders present you with a representative APR before the terms of your loan are expressed, so be mindful that the rate you see might change slightly.
APR is crucial because it includes all fees and interest payments, ensuring you won’t be stung by surprise fees as your loan progresses. So, before settling on credit as a first-time borrower, make sure you know and understand the APR rate presented by the lender.
Borrow from trusted lenders
In the UK, trusted lenders are regulated by the Financial Conduct Authority (FCA). As a minimum requirement, make sure the lender you apply to is registered with and regulated by the FCA.
Lenders must adhere to strict regulations and guidelines set by the FCA, which protect you as you borrow money. If a company isn’t regulated by the FCA, you’re at significant risk, and you could be subjected to a range of hidden fees and unfair repayment terms.
Make sure you can afford the repayments
Last but not least, you need to make sure you can afford the repayments on any loan that you take out. The last thing you want is to get yourself into a tight spot when borrowing money for the first time, as it can affect your entire life. This is why it’s so important to borrow within your means and not to use a loan to buy items that you couldn’t ordinarily afford.
You should look at loans as a way of spreading the cost of something over a long period of time, as opposed to purchasing something that you can’t afford. You can use our loan calculator to see how much you could potentially borrow and what the repayment terms look like before submitting an application.
Apply for an unsecured personal loan today
A personal loan can be a way to fund various products and services, and the application process is straightforward. So, if you’re looking to borrow money for the first time, check out our FAQs to find out more about how our loans work and how they could help you.
Koyo Loans is the trading name of BETR Technology Ltd. Company No. 11483187. Registered Office: Huckletree Soho, Ingestre Court, Ingestre Place, London, W1f 0J
November, 21, 2022