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It is no doubt that we use our credit cards for most of our purchases while we are running short of money. Though a revolving line of credit allows us the flexibility and convenience for our immediate and necessary expenses, it is often considered as an expensive way to pay for things. While as an unsecured personal loan allows you to borrow a fixed amount for a brief time to manage the expenditures.

Unsecured personal loans in the UK are a comparatively better option than credit cards to borrow a certain fixed amount. However, you need to know a few things to look out for while borrowing a personal loan.

How much can you borrow on a personal loan?

Generally, the range depends on the loan broker or lender you are choosing to deal with. However, a typical range lies from £1,000 to £50,000. But the amount that you can actually borrow depends on various factors, such as:

1. Your credit score: A credit score plays a determinant role in the amount that you can borrow. The better your credit score, the more you can borrow [but within the offered range]. If you have a lower credit score, you may find it difficult to borrow the maximum amount that is offered.
2. Your income: Your income statement will help the lender to decide the amount that he can lend to you. With a lower income, it might become riskier for the lender. But if you earn well, then they might consider increasing the loan range.
3. Your expenses: This is also a major contributing factor towards the loan amount that you will be offered. Suppose say, you have a stellar credit score and you earn handsome amount of money every month. However, your expenses are more than what you earn. This may restrict the range of loan amount you will be offered.

What else should you know about unsecured personal loans?

There are two major points that should be taken into consideration while opting for a loan:

• APRs and Interest Rates: You must know the difference between interest rates and APRs. While choosing a personal loan, pay attention to the APR that you are being offered. Compare various APRs of various loans and then make your decision. The APR will help you evaluate the overall cost of the borrowing.
• Repayments: In order to maintain and improve your credit score, you need to repay the loan on time and in full. If you miss a repayment or fail to make any of the repayments, then your credit score may be severely damaged and that will restrict you from borrowing money in the future.

Final Words

Always ensure that you deal with firms that are authorised by the Financial Conduct Authority to safeguard your own interests. Read the fine print thoroughly and raise flags if necessary so that your queries can be addressed. Oyster Loan is an FCA registered loan broker that offers personal loans up to £35,000.