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Cheap UK Cash Loan Fast, Low Rate / Low Interest Secured Loans
Our Online Loan Buys *
| Typical APR | Per Mth | ||
|---|---|---|---|
|
6.9% | £196.56 |  |
|
7.2% | £197.88 | |
|
7.7% | £200.10 | |
|
7.8% | £200.54 | |
|
7.9% | £200.99 | |
| * Based on £10000 over 5 years and is not a full search of the whole market | |||
Cheap personal loans that are right for you. Online loan rates comparison service to help choose from some of the cheapest low rate loans. The keys to what is a cheap loan for you are the cost of the monthly repayment and the overall cost of the loan over its term.
- How can I find the right cheap loan for me?
- Is interest rate the key to a cheap loan?
- What affects repayment of a cheap loan?
- How do I choose a cheap loan?
How can I find the right cheap loan for me?
Obviously anybody looking to borrow money is going to want a cheap loan that is right for them. It makes no sense to pay a higher rate of interest than you must. However, the cheapest loan generally available may not necessarily be available to you. Equally, what look on the face of it to be low rate loans may turn out to have hidden traps and catches that make them more costly than loans that initially appear to be more expensive.
When you start shopping around for a fast cash loan, you will see that all suppliers of low interest loans like to claim the lowest loan rates; you'll see low rate loans and low interest loans trumpeted. You'd think that low interest loans must be the cheapest loans. However, many low rate lenders only quote typical annual percentage rate ( APR ) in describing the loan rates they offer. What that means in practice is that at least 66% of low rate loans applicants who are offered a loan will be offered such low rate loans, but others may be charged a great deal more for their cheap personal loan.
When offering a cheap loan UK lenders quoting a typical APR are setting their loan rates using a method called risk-based pricing. That is to say, they match the perceived risk to them in giving you a cheap personal loan, to what they believe to be an interest rate appropriate to that level of risk. So you need to understand what sort of credit rating you have because it may dictate the true cost of your cheap personal loan.
Is interest rate the key to a cheap loan?
It should be simple to find the cheapest loan - the lowest quoted APR should be the cheapest loan. However, all too often, that low rate loan will not really be a cheap loan when you look at the other figures. What you need to look at is not that temptingly low, headline interest rate but what your actual monthly repayments are going to be. Just how much will you actually have to pay out of your pocket each month when you are paying one of these cheap loans back?
If you have been required to take out some kind of payment protection plan or payment protection insurance, you may find that a loan with an attractively low-sounding interest rate is suddenly no longer a cheap loan. So you need to consider whether your lender will require you to take out such insurance. Is it worth it? How likely are you to claim on it? Indeed, will you be able to claim on it at all? Many people taking out cheap loans in recent years have discovered they have paid for payment protection insurance that they would have been ineligible to claim against, as a result of being self-employed or employed on short-term contracts.
You also need to bear in mind that what might look a low interest loan with a low monthly repayment may turn out to be expensive in the long run because you have decided to pay it back over a longer rather than a shorter period of time.
While the loan rates of interest are an important factor, the keys to what is a cheap loan for you are the cost of the monthly repayment and the overall cost of the loan over its term.
Compare Cheap Personal Loans now
What affects repayment of a cheap loan?
With virtually all of the loans UK lenders offer, your monthly low rate loan repayments will be made up of a mix of repayment of the loan capital and payment of interest. In the early months and years, the amount of your repayment taken up by interest will be larger than towards the end of the loan. This is one reason why you may be unpleasantly surprised if you find yourself in a position to pay off the loan early. This also holds true for a low interest rate secured loan.
If you are paying payment protection insurance as well, you should be aware that you are not necessarily paying a monthly premium. The policy cost is often paid upfront and the amount added to the amount you borrow. You then pay this back with the rest of the loan. Of course, your lender will at the same time be charging interest on the outstanding amount of the insurance premium payment.
The second reason you may be unpleasantly surprised if you want to pay your cheap loan off early is the fact that some lenders charge a penalty for early settlement, in the past possibly up to four months interest. The rules changed on 1 June 2005, and new rules mean that penalties may be less swingeing than in the past.
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How do I choose a cheap loan?
There are many different low rate loans to choose from. The rate for low interest loans quoted by a lender may also vary depending on the amount you wish to borrow and how long you wish to borrow it for.
You need to appreciate that what counts is what your cheap loan is going to cost you. You may find that the cheapest loan for you does not have the lowest interest rate. It may not have payment protection insurance; you may prefer to have this for peace of mind or you may be in a position where it is effectively worthless to you and not worth paying for.
Consider whether you are likely to be in a position to pay the loan off early. If you are, then a cheap loan for you may be one without early repayment penalties. The simplest way to find the right low interest loan for you may be to use an online product comparison service that allows you to tailor your search yourself.
15 August 2007 © Moneyextra.com
Our senior editor Robin Amlôt recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.