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26 April 2017
Need a loan?

Is there something you want for your life but can’t afford? Something that would make a big difference? A loan could be the answer.

But before you get stuck in to applying, it’s essential to stop and think. Loans can be a good option, but they do come with risks. So you need to be totally sure beforehand that borrowing is right for you.

Even if you are sure, it’s important to figure out which loan is best – as some are a safer choice than others.

It’s time to get your thinking cap on! Ask yourself these 4 questions to find the right decision for your finances.

1. Do I really need to borrow?

Borrowing money costs money. It means committing to repayments – with interest. So you should only get into debt if you really need to. 

Be honest with yourself: could ‘not borrowing’ be your best option?

Good questions to ask are: ‘Is this thing I need a loan for really worth it?’ ‘Can I avoid borrowing by getting it cheaply?’ ‘Can I wait, and save up for it instead?’ (To start saving, check out our range of Savings accounts.)

Bottom line: only take out a loan if you’re sure you need it.

2. Can I afford to borrow?

This is a biggie. If you take out a loan and then can’t afford to repay it, you could end up in a hugely stressful situation.


To find out if you can afford to borrow, first work out your budget. Don’t skip this step – it will help you understand how much money you’ve got coming in and going out, and what’s left over for loan repayments.

Using a budgeting app or online planner can help make it easier – here’s a free one we recommend from the Money Advice Service.

Err on the side of caution, and aim for repayments that are a bit less than you think you can afford, to make sure you can pay them comfortably. If you’ve got little or no money left after you’ve paid for essentials, now’s not the time to be borrowing. (Unless you’re looking to consolidate.)

Once you know your budget, use a loan calculator to work out what your repayments might be for different loans and whether you can afford them. (Bear in mind though that some lenders won’t actually give everyone the APR they advertise, so you could be offered a different rate.)

You’ll notice that borrowing over a longer time makes your repayments smaller. However, the total cost will be higher. So it’s best to repay as quickly as you can comfortably afford to.

Don’t forget to check out Bristol Credit Union loans – we’re a much more affordable option than doorstep and payday lenders. We’re safer too, as we check what you can afford to repay and won’t let you borrow more. Compare the cost of our loans here.

3. Have I got a good chance of being accepted?

A really important thing to remember about loans is that each time you apply for one, it leaves a ‘footprint’ on your credit file. This is an electronic document with details of your credit history, which lenders use to decide whether or not to lend to you.

Having lots of applications on your file can make it look like you’re in trouble with your finances, which could be a reason for lenders to turn you down.

So to keep the number of applications on your credit file low, you should only apply for a loan when you think there’s a good chance of being accepted.

How do you work this out? Joining Money Saving Expert’s Credit Club will give you free access to lots of useful tools, including a loans eligibility calculator. This searches loans from big high street providers, and estimates your chances of being accepted for each one.

Don’t worry if your chances don’t look good, as your credit union may still be able to help. Compared to these providers we’re much more understanding, and we often help people who can’t get credit elsewhere.

To boost your chances of being accepted, see our post on ‘how to turn a “no” into a “yes”’.

4. Is this my best credit option?

Before you apply for any loan, you want to be sure that it’s the best loan for you.

That means choosing your top option out of the loans you’ve got a good chance of getting and can afford.

To make your decision, you should factor in:

  • The total cost of borrowing (work it out with a loan calculator)
  • How long it will take to repay (shorter times are better)
  • Whether the interest is fixed (if so, you’ll always know what you’re repaying)
  • Whether you’ll be charged extra for paying back your loan early, or being late with a payment

For borrowing that’s affordable, with fixed interest and no early repayment charges or late payment fees, take a look at the loans we offer.


Now you’ve put these 4 questions to the test, visit our loans page – and if it’s right – make a great application!



How to contact Bristol Credit Union

Main Branch

112/114 Cheltenham Road
Bristol, BS6 5RW

By phone

Call us on 0117 924 7309

By email

info@bristolcreditunion.org.uk
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Bristol Credit Union Tel: 0117 924 7309 Fax: 0117 989 2540 Email: info@bristolcreditunion.org.uk Web: http://www.bristolcreditunion.org
© Bristol Credit Union 112/114 Cheltenham Road, Bristol BS6 5RW Tel: 0117 924 7309