Advice On How To Get The Best Loan Rates
Most of us need a loan at some point, and cheap loans are the most attractive. Whether you’re looking to make some home improvements, make a big purchase, or even consolidate your existing debts, you want to find a cheap loan that fits your needs and is affordable.
Although there are a number of reasons a loan may or may not be right for you, the best loan rate is often the loan with the lowest APR or interest rate because the lower the APR, the less you will pay. Finding the lowest APR for the amount you needed to borrow is your ultimate goal in getting a loan.
The best loan deals let you borrow the amount of money you need at the cheapest cost while still being affordable to pay back. In general, a deal is considered good enough if you are able to get the amount you need at a low interest rate, with no other charges.
In order for you to work out the best loan rate you can get, the first thing you should do is decide how much money you want to borrow and how long you’ll need to pay it back. This way, you can compare how much lenders will charge you to borrow the same amount of money. This will allow you to easily check and compare the rates and charges of different lenders.
If you are not really sure how much money you will borrow, use a loan calculator on a comparison site that will let you play around with different amounts of money and the length of time you need to repay the loan. A loan calculator can help you make the calculations for you, so you can see what the size of the monthly repayments would be.
Don’t apply for too many loans at one time because credit application searches leave a mark on your file. If you make a lot of applications in a short period of time, it is likely to cause damage to your credit score and you may not be offered the best loan rate. This is especially the case if the applications are unsuccessful as this can further negatively impact your credit score. What you can do is to use quotation search or soft search tools, which use just the key information about you to tell you which products you’re most likely to be accepted for.
Know all the options available to you, and familiarize the loan terms and conditions. Each lending company has a different decision when giving you a loan, so try not to get carried away and take out the first loan offered to you. Some will offer a much higher rate of interest than others, so it’s worth shopping around.
Moreover, loans aren’t just about interest rates, but you can also ask about other features such as paying back the loan early or other fees involved. Some lenders offer low interest rate but may have other fees and charges, and you’ll end up paying more than you originally thought.
Consider other forms of credit as well. This is greatly dependent on the amount you will borrow. Bear in mind that the maximum amount you’re normally able to borrow with a personal loan is around £25,000, and £5,000 on a credit card, so choose credit card if you only need a small amount. The most important thing to consider here is your credit limit and the fact that you want to get the best deal.
Best Loan Rates for Bad Credit
The best way to get a cheap loan is to have good credit. Cheapest loans are often reserved for those with high credit scores. If you have a perfect credit history, you’re more likely to get one of the cheaper loans on the market. If you have a bad credit, you may still be able to borrow money, but it will usually be at a higher interest rate and you need to ensure that you can keep up with the repayments before applying.
All advertised loan and credit card APRs are representative and lenders are only required to offer their advertised ‘typical’ APRs to two-thirds of applicants. Sadly, only about half of successful applicants get the advertised APRs.
This may seem unfair if your credit is not looking so good because you were struggling financially at some point. People have poor credit histories for many different reasons. You could have defaulted on a loan payment in the past, have been bankrupt, missed some payments on bills, or you may have no history of managing credit at all. Having a bad credit score is not uncommon, as many people struggle to keep up with their expenditures.
However, this doesn’t necessarily mean you can’t get a good deal on a loan. There are still lenders who are willing to offer you a loan specific to your needs. You’ll find many lenders cater for all different types of credit ratings.
If lenders believe that you’re likely to repay on time and with the amount as agreed, they’ll offer better rates and more options. Lenders usually check your employment status and your monthly income. What lenders like to see is your ability to pay your debt, so if there’s no problem, you’ll be granted a loan. Lenders make sure you have a stable income and that you can afford the repayments.
Over time, you can improve your credit once more by working steadily and being responsible. Bad credit doesn’t have to follow you forever, so you can always improve your credit score by getting a grip on your finances. You can boost your credit rating by making on-time payments and paying off missed bills.
Will A Guarantor Get You The Best Loan Rates
Guarantor loans are not something new in the loan industry, and they are gaining popularity over the years. These loans are helpful for those who have a bad credit history. A guarantor loan can be either a secured or unsecured loan that requires you to have a person willing to meet your repayments if you find yourself unable to.
When you apply for your guarantor loan, you are supplying the personal information of someone who will pay off your loan should you default on your payments. This reduces the risk for the lender, thus they are able to offer you lower interest rates than you could obtain elsewhere.
A guarantor is also called a co-signer since he or she will co-sign your loan. He or she may be a close friend or family member who trusts you to keep up with your repayments, but it can be generally anyone. However, the guarantor must not be financially linked to you such as your spouse. Guarantors have to be of legal age with a job and a good credit score. They will need to be a UK homeowner, need to provide identification, proof of address, bank statements and other details.
A guarantor loan may not appear cheap as compared to regular loans. While it is hard to find anyone who would agree that 37% interest rate is low, but it is the cheapest loan option that people with a bad credit score can qualify for. You’ll find many lenders who offer competitive rates, so it’s worth to take time to look around.
Best Loan Rates Available With No Guarantor
A guarantor loan is particularly recommended for borrowers who are taking out a loan for the first time or have a bad credit rating and want to smartly manage their debt to improve their credit score. However, if you are unsure about the guarantor loan, you can ask a financial adviser or get yourself a bad credit loan instead.
A no guarantor loan may be riskier for the lender. Although the interest rates are a bit higher than those of guarantor loans, you’ll still get a good deal from some lenders. Loans with no guarantor are usually small amount too, as opposed to having a guarantor.
Best Loan Rates of Direct Lenders
To find the best loan rate, you need to get quotes from as many direct lenders as possible. Then, compare the total cost of paying back the amount you want to borrow. Know how much you will borrow and how much interest rate will be charged.
Applying to a direct lender is usually better than using a broker because you do not pay a fee for having the broker find you a suitable loan, you can compare quotes from as many lenders as you like, rather than a select few, and you can avoid several searches on your credit record, which happen with some brokers.
Best Loan Rates In The UK
It is easy to find the best loan rates in the UK especially if you have a good credit score. There are many lenders in the UK offer loans at a reasonable representative APR of just 2.8% with the amount ranging between £1,000 and £25,000 over a period of one to seven years. Some lenders even offer as much as £40,000 with flexible loan terms for up to seven years.
Customers may receive a different APR to the advertised representative of the lenders as they take into account amount borrowed, loan term and personal financial circumstances when making a decision. The loan amount and the loan term may vary, but many lenders who have no additional fees and offer flexibility with repayments on the loan.
If you opt for a bank, you can take advantage of some discounts or bonus they give if you have a current account with them. Applications can be completed either over the phone or via their online application. You can also go directly to the bank branch or the lender’s office.
You can also get the best loan rates from companies offering peer-to-peer lending. They match borrowers to investors based on the amount the borrowers are looking for, their personal circumstances, and the rate of interest they are able to pay back. A peer-to-peer lender allows a loan for up to £35,000, which is payable in one to five years with the competitive rate of interest. Some may have fees but are not charged up front. Instead, they are spread alongside the monthly repayments, so just beware.
Best Loan Rates In An Instant
An instant loan is a form of short term credit that typically over one and six months. Other terms used for instant loans are bad credit loans, payday loans and quick loans. People usually opt for instant loans because they’re a fast, short term form of finance that is perfect for emergency situations such as paying an overdue bill, covering a medical bill, repairing a vehicle, etc.
Instant loans are usually those offered by online lenders as well. The application takes less than ten minutes and if you are successful, the funds are transferred to your account within the day. These loans are usually expensive as they have high APR. However, there are still many lenders in the UK that offer surprisingly lower interest rates than that of other instant loan lenders.
Advice To Take Away
If you can get the amount you wish to borrow at the lowest possible rate, without other fees attached, you got yourself the best deal already. The interest rate of a loan is determined based on your credit rating. Check your credit score and see if you can improve it. If you have a good credit score, maintain it as much as possible. The higher your credit score, the better chance you have of being offered the best rate of interest on a loan.
Don’t apply for multiple loans at once. Use soft searching instead of applying for multiple loans. Shop around and know all the facts. Consider the amount you need to borrow and choose the best option for that loan amount. This way, you can decide whether you’d go for a personal loan, a short-term loan or long-term, or credit card.
In the end, getting the best loan rates really depend on your personal circumstances, the amount you need to borrow, and the repayment period you wish to have.