We like to think that lending money is strictly business. The “numbers” are crunched and we are told whether or not we qualify. That’s mostly how it works, but there is some discretion by the loan officers and you may be able to use that to your advantage with personal loans. If your bank’s computer has issued a “no,” you need to pick yourself up and try again.

Breaking down in tears may gain sympathy, but it won’t get you a loan. Instead, show commitment and belief in yourself. Don’t be vague about your plans: the bank wants solid information about how much money you need and what you need it for:

“I need to buy a good used car because I am a licensed massage therapist who works on-site and I need to be able to reliably get to the companies that hire me” will sound much better than, “I’ve been thinking about buying a car. Better than the bus, that’s for sure.”

You shouldn’t hide from unpleasant financial facts. If a burst pipe cost you £1,000 in excess for your homeowner’s insurance and it caused you to be late on a utility payment while you recouped, explain the situation and why and how it will get better. “I took on extra shifts for two weeks to get back on my feet and I’ve sent this month’s utility payment early, so it shouldn’t happen again.”

Like in other parts of life, the general art of blagging can help you when you are approaching potential lenders. Whether it’s asking for better than the representative APR or trying to get a fee waived, your attitude can make a difference. Act confident and friendly, even if you’re feeling anything but. Mentally remind yourself of the achievements you’re most proud of before your meeting.

Dress the part, too. You don’t want to show up in a custom-tailored designer suit, because they’ll wonder why you need the money at all. But look sharp, wear reasonably dressed-up clothing that you know you feel confident in. Walk tall, smile, and offer a handshake when you meet your loan officer. Be friendly to the “gateway” people too, like the receptionist.

Learn the language of loans. Make sure to use your best manners, and ask questions that show you know what loans are about. Compare loans before you meet your loan officer so that you know what’s generally on offer. And if you can inject just a bit of humour into your conversation, you may get a better result. Making a good impression and getting people on your side is an art and, if you’re on the borderline between qualifying for a loan and not, your blagging skills could make the difference.

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When you look to take out loans, you should have two up-front goals: paying back the money as quickly and as cheaply as possible.

In some cases you may be faced with the option of refinancing, or getting a new loan at a cheaper interest rate. In some cases this is a very worthwhile option and can save you hundreds or thousands of pounds (as with a cheaper mortgage). In other cases, fees and early repayment penalties may offset any savings from a lower interest rate. So if you are considering refinancing, be sure to consider all the costs involved rather than just the interest rates.

With the advent of the Consumer Credit Directive in 2011, some things have changed when it comes to borrowing money. It is now easier to compare unsecured loans as well as credit cards because of the way that lenders and card issuers have to quote interest rates. For example, if a rate is quoted in an advertisement, it has to be the rate that at least 51% of applicants could reasonably hope to get. The idea is to make it harder for lenders to display one interest rate to borrowers, only to make the actual offer at a higher rate.

Additionally, with new loans, early repayment penalties may not be more than 1% of the amount of the credit that is repaid early, or no more than 0.5% if the repayment is made within the final 12 months of the credit agreement. If you have an older loan, the early repayment penalty cannot be more than two months’ interest, meaning that the huge repayment penalties that were in many older loans no longer apply.

What these changes mean for consumers is, taking out a personal loan for debt consolidation or some other purpose should be a more transparent process than it used to be. The same is true whether you’re taking out a new loan, refinancing an older loan, or attempting to combine two or more high-interest loans into one loan with a lower interest rate.

But this does not automatically mean you should ditch any older loan with a higher interest rate than what you can get now. Interest rates for personal loans are higher for lower principle amounts. For example, a £3,000 personal loan will generally have a significantly higher rate than a larger loan. Rates tend to drop at the £5,000 to £7,500 level, so it’s more likely you’ll save enough to make it worthwhile if you’re seeking a loan for a higher amount – but remember to only borrow what you need!

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New rules for creditors go into effect in 2011 due to the new Consumer Credit Directive, and they affect your credit cards and loans. Here is an overview of the changes, and what you, as a consumer, should expect.

Creditors must now provide a full explanation of the credit being offered, and consumers will have the right to cancel within 14 days of agreeing to credit terms. Consumers will be informed when their debt has been sold, or when creditors check potential borrowers’ credit worthiness.

Starting in January, credit card issuers have to pay off customers’ highest interest debt first on cards where different types of borrowing carry different interest rates. They must also notify customers twice, on different occasions, of interest rate increases and give customers 60 days to reject the increases and cancel their cards. Customers will have to be given a reasonable amount of time to pay off the debt on the cancelled card.

From 1 February 2011 Credit card issuers must  advertise rates that are representative, meaning rates that more than 51% of applicants are eligible for. They must also account for things like annual fees in calculating their rates, to give consumers a more representative APR when they compare credit cards.

But don’t think that card issuers won’t try to make up potential revenue lost as a result of the Consumer Credit Directive. Many of them are introducing new fees that won’t be affected, such as “dormancy” fees and increased charges for foreign currency exchanges.

For example, Santander will start charging store card customers £10 if they let their cards lie dormant for 6 months. Retailers like Debenhams and Topshop are following suit, making it harder for shoppers who only use cards for introductory offers. To get around this, customers should take advantage of introductory discounts on store cards, pay the bill in full, and then cancel the card.

As for foreign exchanges, card providers have started setting their own exchange rates for credit card customers, making foreign transactions cost more.

The Consumer Credit Directive is designed to protect consumers, but consumers should also be alert to creditors adding new fees in attempts to make up lost revenue.

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Often, you do not need to own a house to get an unsecured loan. Unsecured loans, also known as personal loans, are loans that do not require collateral of some sort (such as a house) as a condition of borrowing. Secured loans do require collateral, and often this collateral is in the form of a house. The big danger with a secured loan backed by your house as collateral is that you could default on the loan and lose your house.

If you are self-employed, or if your credit history is less than pristine, then you may have no choice but to seek a secured loan (assuming you own a house or something else that could be used as collateral). But if you have the credit history for it, an unsecured loan is not only possible, but desirable in most cases.

Cheap loans are unfortunately harder to come by than they were a few years ago due to the credit crunch. Lenders are more selective, and loan applicants with less-than-stellar credit ratings may find they’re faced with high interest rates. That’s why it is so important that you compare personal loans before signing anything. Compare not only interest rates, but fees as well. Sometimes an interest rate can be deceptively low, because the lender makes it up by taking large fees, although this will become less of a problem when the display of  Representative APRs is made compulsory in February as part of the Consumer Credit Directive. Compare all loan costs before choosing a lender for your unsecured loan.

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From 1 February 2011, financial services providers in the UK will be subject to a new set of guidelines.  The grandly named Consumer Credit (EU Directive) Regulations 2010 makes various changes to the way financial services companies advertise their products.  One of the most important parts of the new legislation requires companies to include a ‘Representative Annual Percentage Rate (APR)’ on their adverts.

What products do the new rules apply to?

The new Directive applies to advertisements and credit agreements for all loans to consumers under £60,260 excluding  agreements secured on land, certified business loans and investments regulated by the FSA.

It will include items such as personal loans, smaller secured loans and credit cards.

What is a ‘Representative APR’?

Companies can often charge consumers different APRs for the same product.  For example, if credit card or personal loan rates are determined by your credit rating or your income, you may not pay the same rate as someone with a lower income or superior credit history.

APR figures in the UK have also often been misleading as they don’t always take into account certain fees, such as annual charges or credit card ‘balance transfer’ fees.

The Department for Business, Skills and Innovation (BSI) defines the ‘Representative APR’ as: “an APR at or below which the advertiser reasonably expects, at the date on which the advertisement is published, that credit would be provided under at least 51% of the agreements which will be entered into as a result of the advertisement”

In simple terms, where the APR for a loan or credit card can vary depending on an individual’s personal circumstances, the APR that is stated on an advertisement must represent at least 51% of the business that the financial services provider expects to come from that advert.  A representative APR will also take into account other charges associated with the product, for example, balance transfer fees, and will be based on an EU average credit limit of £1,200 (unless known to be lower).

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