Why was I offered that rate?

Applying for a loan? You should be aware that there are many loans available, and not everyone is offered the same rate.

Why? Well for starters there are two major types of loan: secured and unsecured. The first means you offer security for the loan, usually property. An unsecured loan is provided without security.

Secured loans generally offer lower interest rates than unsecured loans.

But what is a headline interest rate?

When a company advertises a loan, it publishes a headline rate that must be offered to at least 66% of successful loan applicants. This means if you have a good credit profile, you may be accepted for the best headline rates.

However, if you do not score as highly as the top 66%, you may be offered the same loan at a higher interest rate, rather than be declined. The justification for this is the level of risk involved.

How you are individually assessed

When you apply for a loan, you are assessed in order to determine your level of risk. The lender then determines which rate to charge you.

As well as a risk assessment, the lender will consider security and the loan purpose.

For example, if you already have a large amount of debt and are seeking a debt consolidation loan, prospective lenders will assess a number of things: your credit score, how much you can afford to pay each month, your credit history and whether you own property.

If you suffer from a bad credit history, loans can be difficult to get from High Street banks, even if you are homeowner. But the good news is there are many specialist lenders who could help, based on different criteria to the High Street.

Debtbuster Loans has access to many lenders, so there's a very goodchance you'll get the rate you want.