Intense competition in the UK loan market has made it easier for you to find a competitive loan deal. Personal loans are available with all prominent lenders in the UK loan market. There are loans that help you in any situation. These loans are versatile in nature and permit you large number of applications including cosmetic surgery, Christmas shopping, vacations, debt consolidation, etc.
When seeking loans, borrowers strive to get lowest possible APRs. Borrower's individual circumstances have a substantial effect on the rate of interest that they may get. A borrower having a good credit score might be able to win a loan at around 6 per cent. But, if you have a bad credit score, it is hardly possible.
What is the criterion for getting cheap loans?
A cheap personal loan is sanctioned on the basis of your creditworthiness. Your debt-to-income ratio and credit rating becomes very important in this regard. If you have a good credit rating, it shows that you are a trustworthy borrower. Similarly, the lower the debt-to-income (DTI) ratio, the better it is. Let us see in detail what DTI ratio is.
This ratio compares your total debts with total income. The lesser the debts, the less would be the DTI ratio. Normally, a DTI ratio of up to 20 per cent is considered as very good. It shows that your repayment capability is very sound and you could be expected to repay loan in time.
If DTI ratio exceeds 50 per cent, it shows that you are financially unstable. With such a substantial amount of your income going into servicing your debts, you are least expected to repay your future loans in time. Any lender would try to avoid such a borrower or else would ask for a high interest rate. So, if your priority is to get cheap loans, make sure that you have a good credit rating and a healthy DTI ratio.
