| Get an unsecured loan?
Unsecured personal loans are granted on a mixture of factors, the most important are your income and employment status and your credit history. The interest rates available vary widely depending on how much you borrow and the time period over which you pay it back. Most advertised rates are typical rates and so, if you only wish to borrow small amounts, you will normally be charged a higher rate than that advertised. Unsecured loans are only available for sums of 25,000 or less. Click here for more on interest rates. To get the very cheapest unsecured loan rates you will need to have a good credit history. Click here to find out more about credit ratings. .
Japanese lenders deny loans to credit risks
TOKYO: Aiful, Japan's biggest consumer lender, and its two closest rivals rejected more than half of loan applicants in January as they seek to trim costs by weeding out borrowers who could default. Aiful cut approvals by half, granting unsecured personal loans to 36 percent of applicants in January, compared with 72 percent in February 2006, according to data on its Web site. Acom, the second-biggest lender, cut approvals by a third to 47 percent in the same period. Promise ratified 40 percent. Bad-loan costs have mounted in the $170 billion consumer finance industry since Japan's courts last year opened the door for borrowers to claim refunds of interest and regulators reined in collection tactics. The three biggest lenders forecast a combined $5 billion loss in the year to March 31 and may struggle to return to profit as a new law caps their charges at the same level as banks.
125 per cent mortgage welcomed by consumer website
A leading consumer website has welcomed Alliance & Leicester's decision to launch a 125 per cent mortgage, saying that it will help first-time buyers get on the property ladder.Recently, Alliance & Leicester said that it would offer people a 125 per cent PlusMortgage, which combines a mortgage with an unsecured personal loan.While Citizens Advice Bureau and the National Debtline have criticised the lender for offering people a deal that means that are reduced to negative equity from the start, moneysupermarket.com has welcomed the move."I believe A&L is acting with full responsibility in bringing this product to market," said Louise Cuming, the head of mortgages at the price comparison website."It's not surprising to see another lender join the 100 per cent plus market when first-time buyers continue to find it increasingly tough to get a foot on the housing ladder."Ms Cuming explained that the deal was not encouraging people to take on more debt that was appropriate, as it will "be sold via brokers and therefore borrowers can only access [the mortgage deal] after a stringent advice process."She added: "A&L is only targeting people with the propensity to take on this large amount of debt – and, in fact, lenders have historically seen lower percentage arrears in the 100 per cent plus market versus the 95 per cent sector."A recent report from Nationwide suggested that first-time buyers now have to spend £120 a month more to pay for their mortgage than they did a year ago.
The costs of bad credit
As with any other personal loan, the interest rate you get largely depends on your personal circumstances. However, with this particular type of loan, the single most important factor in determining the rate you get is your credit history. A poor credit rating means that the interest rate you will pay will be markedly higher than with other unsecured personal loans. As most bad credit loans are likely to be variable rate deals, you should be aware that your loan repayments will change in line with interest rates. Click here for more on fixed and variable rates. If you intend to pay your bad credit loan off early then make sure that you know what the early redemption penalties (if any) are. Remember: if you want to repair your credit rating over time then you need to make every payment on any loan you are given.
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