The annual percentage rates (APRs), for the best deals, have fallen steadily since the beginning of the year. This is good news for anyone looking for low-cost loans.
The cheapest rates are available to borrowers who need between PS7.500 and PS14.999.
Sainsbury’s Finance offers a representative APR at 7.1%, which is much lower than the average rate of 8.33%. PS231.16 a month would equal credit charges of PSD822.
Alliance & Leicester’s representative APR is 7.2%. You would pay PSV231.48 per month if you borrowed PC7,500 over three years at this rate. The total credit charge would be PS833.
It is worth checking your credit score
Some gladloan.com lenders may not allow you to take out a loan. Others might offer you a higher APR because they consider you riskier.
When you are trying to determine if you have the financial means to pay off a loan, make sure you check your credit report so you can get a real idea of how much you will be charged.
Do not apply for too many deals
It can be tempting to submit multiple applications simultaneously if you aren’t sure which lender offers the best APR.
This is a bad idea. Most applications will show up on credit reports, which can be a concern for lenders. It could also mean that you are denied for loans you may have been eligible for.
Nationwide will however only conduct a soft credit check on your credit file before they make you an offer.
This means you can easily see the rate you would be offered, without having to affect your credit score.
If you want to borrow PS7,500 over three years, it offers a representative APR of 7.3% – only just behind the market-leaders, and this deal is available exclusively through moneysupermarket.com.
You’d be paying PS231.81 per month. This would amount to a credit charge of PSD845. This is HTML23 less than the Sainsbury’s market-leading loan.
Direct rates may not always be the best.
Sometimes it is more cost-effective to contact a lender directly to obtain a loan.
The Nationwide rate, for example, is not available on the bank’s site.
The Alliance & Leicester 7.2% rate can only be found on price comparison websites, and is not available to applicants who apply directly.
Santander personal loans are the same. On borrowing PS7500 over three years, the bank offers a representative APR 7.3%. This means monthly repayments of P231.81 and a total cost of PSD845. However, this deal is not available directly.
Sometimes credit cards work better
A market-leading credit card can be more affordable than a loan for a smaller amount of borrowing or less. This is because personal loans have much higher rates for smaller amounts.
Certain credit cards offer interest-free periods for new purchases. This means you won’t have to pay any interest if you repay the debt by the end of the 0% promotional period.
The Tesco Clubcard Credit Card offers new customers 13 months of 0% financing on all purchases. You can also transfer your balances to the card for an 2.9% fee and get nine months of interest-free credit.
However, if your balance is not cleared within the introductory period you will be subject to a representative APR 16.9% variable. You may want to consider a loan instead.
You can get a loan secured or unsecure.
There are two types of loans and it is important to know which one you are applying for.
Unsecured loans are for those who only require a small amount of money, not more than PSD25,000. A secured loan is a loan that is held against your property. These are also known as “homeowner loans”.
Keep in mind that if you can’t make your payments on a secured loan, the lender has the right to take over your home and get its money back.
Borrowing more can be less expensive
Rates are lower for PS7500 or more. It can be cheaper to borrow slightly less if you need PSD7,000.
If you need to borrow PS7500 over five years, the cheapest rate is 7.2%. This will cost you PSD1,405 for the term.
If you borrow PS7,000 over five years, the best rate offered would be 8.5%. This means that you will pay PS1,554 for the entire term. The extra HTML500 could be used to pay your repayments.
It is possible that you won’t get the rate that you see.
You won’t be offered the advertised representative APR if you are accepted by a lender.
Lenders must offer this rate to at least 51% customers. This means that you may be offered a higher rate.
Consolidation can save you money
Rates will drop if you borrow more. If you have credit card and store debts, it might be worth consolidating those borrowings to get a lower overall rate.
It’s possible to save hundreds of pounds on interest and it’s much easier to manage your money.
Repayments made early can be costly
You should consider putting aside money to pay off the debt sooner than you planned. However, most loans have an early repayment fee.
It is typically a few months of interest. However, this should be a consideration when considering the cost of a loan.