How To Get a Cheap Loan
Okay, let’s face it. Cheap loans are reserved for those who have a good credit history. True enough, but let me tell you something. You can still get a good deal or might as well call it “cheap” even if you have a not-so-impressive credit rating.
Yes, you read it right. Getting an affordable loan isn’t impossible. It doesn’t matter where you plan to spend it on. From costly expenses such as a home upgrade, to having just the right amount for standing debts or monthly bills – you can pay them off even with the most affordable loan in the market.
How to Get a Cheap Loan
There are plenty of loans to choose from. While you may not be able to qualify for all of them, some would be good enough for your needs. However, the best possible loan you can apply for is one that has a low annual percentage rate, otherwise known as APR. When a loan has low APR, its overall cost tends to be more affordable.
Applicants with remarkable credit scores usually get loan offers with the lowest APRs. So if you really want a bargain, you should be aiming for a good credit score and keep it that way. The best way to achieve good credit (as well as maintain it) is to fulfill repayments in a timely manner.
It’s important to have an idea of your preferred loan amount and loan terms, even before you fill out an application for. When you know how much you want to borrow and for how long you’re repaying it, you can more easily compare the different types of loans online – as well as find the cheapest options.
Start by comparing lenders and their offers based on your preferred loan amount. Don’t forget to look into additional charges on top of the interest rate, as these could easily add up. See if there are any features in the loan agreement which you can take advantage of given your circumstances.
Other features of the loan that you might want to know are whether it allows you to make early repayments. Some lenders lower their fees or interest rates if you pay off your loan early.
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Cheap Loan Options
Cheap loans come in many forms because they would depend on your personal needs and circumstances. You’ll find many types of loan in the UK that caters to different financial needs. Knowing your options will help you find the most affordable loan that fits your financial situation.
Which Is Best – A Short Term or Long Term Loan?
You have to choose between a short-term loan which you can repay more quickly, and a long-term loan that can be paid for an extended period. Remember that longer duration loans may have lower monthly payments than that of a short-term loan, but you will be paying more on the interest as the loan is being stretched out to several months or even years. Short-term loans may have higher monthly repayments, but they have lesser cost than long-term loans.
Do I Get A Secured or Unsecured Loan?
Aside from the length of loan terms, you should also ask yourself if a secured or unsecured loan would be more apt for your situation. The cheapest loan types are the ones that are secured or guaranteed. Examples of these loans are home loans, car loans, and guarantor loans.
Secured loans may have lower interest than unsecured loans. However, they are riskier on your part since you will be required to put up a personal asset as collateral. The lender can take your asset in the event where you can no longer pay your debt.
A guarantor loan requires you another person to guarantee your loan instead of putting up a property. The guarantor must have a good credit rating and stable income. By co-signing your loan, he or she pledges to shoulder the repayments of the loan if in any case, you can no longer do so.
These loans have much lower interest rates and overall cost because the risk is lesser, as there is a guarantee to your loan. Unsecured loans are typical personal loans that are solely dependent on your creditworthiness. This means that the lender trusts your word that you will pay up your loan. The lender will definitely look into your credit history to see how well you make repayments on your previous debts.
What if you have a bad credit history?
To get a cheap loan, work on improving your credit score before you apply for a loan. However, if are in an urgent need for money, you can take out a bad credit loan.
You can still qualify for a decent loan irrespective of your credit score. In fact, there are several lending institutions specializing in loans for people who either have thin credit or a bad credit history. These are the kinds of lenders who would take your income, employment status, and capacity to pay into consideration.
A bad credit loan can be beneficial for your credit. If you repay on time each time you take out one of these loans, your credit score will improve dramatically. It also helps to pay off existing debts or any bills you might have missed, as well as striving to be more financially stable.
It’s true that bad credit loans tend to be more expensive than your average loan, largely because of their high interest rates. However, you can still find a good deal by looking for loans with low APR.
Take Aways
Lenders in the United Kingdom have seen an increase over the last years. You can now apply for a loan from banks, credit unions, online loan providers, short-term lenders, and peer-to-peer loan firms.
The number of loan providers in the UK has surged in the recent years. People can now take out a loan from banks, private financing firms, small and short-term lenders, online lenders, credit unions, and peer-to-peer (P2P) lending companies.
Oversaturation in the lending market has encouraged lenders to offer loans at more competitive prices. Thus, you now have more options to choose from and a better shot at getting an affordable loan. It certainly helps that many online lenders are flexible with their terms, and are willing to provide loans with better rates.
Nowadays, even bad credit can’t keep you from a cheap loan. Several UK lenders do have loans available to applicants with bad credit and they don’t even compromise the terms or cost of these loans. Applying for online loans is going to save you more on overall costs. Since these lenders operate remotely, they can give you better offers.
If you want to get the cheapest loan possible, know how much you want to borrow, how long for, take time to shop around, and compare rates. Always be certain on how much you can afford to repay each month.
The quicker you repay the loan, the less you will pay, but the monthly repayments will be higher. Ultimately, what you want to achieve is a good credit rating. Keep up with your payments and maintain, if not improve your credit score for you to get the cheapest loans in the market.
