Cheapest Loans
Advertisments can't always indicate the cheapest loans
Summary: What you see isn't necessarily what you get when it comes to loan advertisements. The trick is to compare what's available and find the loan that's right for you.
When it comes to loans, it's natural to look for the cheapest one available. Headline rates - the ones featured in the advertisements may look very tempting but just because a brilliant rate is advertised it doesn't mean it's available to everyone. The best deals are saved for the people with excellent credit ratings and they're the ones who'll get these magic rates.
Lenders will do their research and take into account your personal circumstances and credit history before they decide the APR (annual percentage rate) which will apply to you. A first-rate credit rating will stand you in good stead providing there's nothing to worry the lender about the circumstances of the loan. However, it's not just the lowest APR that you need to take into account.
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insertrssIf you find you're able to repay the loan before the planned end of the term, this could incur a charge known as an early settlement fee or early redemption charge. Your circumstances could change and you could regret agreeing to these terms. A slightly higher APR, but without this restriction, could be the better choice for your loan.
At this stage, you'll probably be approached regarding some payment protection insurance, or PPI. This is a product designed to cover your repayments if you are sick, involved in an accident or become unemployed.
The cost and cover of this protection varies between different lenders and there is no obligation to purchase the cover at the time of taking out your loan. In fact whether or not you decide to arrange this protection is a personal choice. It's not suitable for everyone and you should read any terms very carefully to make sure that you are, in actual fact, eligible for any benefits. There have been cases of people taking this out when in fact they're self employed or work on a sub-contract basis, so wouldn't be covered. It can be quite an expensive insurance and if you do decide to buy it from the lender, they may add the cost to the loan at the beginning of the agreement and you'll be charged interest on the insurance too!
