Are you planning to apply for a loan? Are you wondering whether or not it’s the right time to apply for a loan? Here is what you need to know before applying for a loan.
Loan Rates Have Reduced
If you are looking for a low-cost loan, this is the best time to do it. Since the year started, the APRs (representative annual percentage rates) on the best deals have been reducing dramatically. Since November 2008, if you are looking for a loan of £7,500 to £14,999, you should be able to get the cheapest rates available, also taking into consideration what else is out there that may benefit you and your circumstances, perhaps a Rapid Bridging loan might be the way for you.
If you want a loan of £7,500 for 3 years, the APR in Sainsbury’s Finance is 7.1%. It is actually lesser than the average rate last year which was 8.33%. Therefore, monthly payments at this rate would be £231.16 a month. The total charge for credit would be £822. On the other hand, the APR at Alliance & Lester is 7.2%. Therefore, if you borrowed £7,500 for 3 years at that rate, you would have to pay £231.48 every month and a total charge of £833 for credit.
It Pays To Check Your Credit Score
Not all lenders will allow you to take a loan. Actually, others will give you a higher APR than the representative amount because you are riskier. Therefore, when looking for a loan, you should take a loan at your credit file to find out if you will be offered the headline rate.
Don’t Apply For Lots Of Deals
If you are not sure the best lender to give you the best APR, you might apply for a lot of loans from different lenders. It’s not a good idea to do this because these applications will show up on your credit history. It will actually worry the lenders and you will end up getting rejected for loans that you qualify for. However, if you apply for a loan with Nationwide, they will run a soft search of your credit file before they make you an offer.
As such, you will see the rate you will be offered without hurting your credit score. If you are looking to borrow £7,500 over 3 years, you should get an APR representative of 7.3%. It’s a little behind the market leaders and is available only through moneysupermarket.com. With this rate, you will only be paying £231.81. As such, the total charge for the credit will be £845. It’s just £23 more than the loan available with Sainsbury’s Finance.
The Best Rates Aren’t Always Available Direct
It’s not cheaper to approach a loan lender directly when looking to apply for a loan. Actually, it might be more expensive than you imagine. For instance, the loan options available with Nationwide are not available on the bank’s website but only through moneysupermarket.com. Also, Alliance & Leicester offers a 7.2% rate that can only be accessed through a comparison website and not directly.
The same goes for personal loans available on Santander. The bank’s representative APR is 7.3%. if you borrow £7,500 for 3 years, you will get monthly repayments of £231.81 with a total charge of £845. However, the deal is not available directly.
It costs Less To Borrow More
Since the rates are lower if you are borrowing more than £7,500 it’s cheaper to borrow more if you want around £7,000. For instance, if you are looking to borrow £7,500 for 5 years, the cheapest rate available is 7.2% which will cost you £1,405 with time. If you borrowed £7,000 for 5 years, the best rate is 8.5%. Therefore, you will end up paying £1,554 over the term of the loan. Get the extra £500 for a better loan.