Get The Cheapest Loans with our Loans Guide

Provided you have budgeted, you get the cheapest rate possible and it's affordable, there's nothing wrong with borrowing money to pay for something now, you would have otherwise had to wait for. Debt in it's self isn't bad, it's bad debt that is bad i.e debt with a high interest rate attached. Follow the guide below to borrow at the best rates, cutting your costs to the bone! Also check the credit cards section to save even more...

With Borrowing rates at near historic lows, it's a great time to borrow and because the rate is fixed for the term, you're locked into a low rate.

If companies and governments can borrow why shouldn't you?

The problem is, there are a plethora of trick's and techniques required to to keep your debt at the lowest rates.

• Personal Loans - These are designed for fixed term borrowing of up to £25,000, however under some circumstances the right credit card is cheaper.

  Special balance transfer credit cards allow you to shift debts to them at much cheaper rates. Some cards have life time interest rates at as low as 3.9%, less than the lowest loan rate. Short term borrowing on many credit cards is available at 0% for new customers, as long as you make your purchase using your card during the first year.

  Personal loans offered by most high street lenders are referred to as 'unsecured', better than 'secured' as the lender has no 'security' over your home if you can't repay.

• Secured Loans - These are design to allow fixed term, variable rate borrowing from £5000 to £150,000+, over 5 to 20 years. There are very specific circumstances under which this type of lending will be suitable. They effectively allow you to borrow money with your property as security. The down side is that if you are unble to repay, the lender can take action to recover the debt through repossession of your home. These are also referred to as homeowner loans as you must have an exsisting mortgage to apply.

Deciding How Much To Borrow and For How Long

Basically, borrow as little as possible, over the shortest period possible. The faster you repay your debt the faster you stop paying interest. You need to ensure that you can comfortably afford to pay the repayments. Taking finance over a longer period of time will reduce the repayments but will mean your paying interest for longer, increasing the cost of the debt significantly.

Borrowing £10,000 at 8% over 3 years will cost £1281.08 in interest and the monthly repayments would be £313.36, borrow the same £10,000 over 10 years and the cost of interst will rocket to £4559.31 with monthly repayments of £121.33. The monthly rate looks appealing, but you would pay almost 4 times as much interest. Nightmare!

Borrow only as much as you need, over the shortest period you can comfortably afford the repayments on.

Watch Out For Unnecessary Fees

Often there is a 'fast delivery' fee automatically added to get you the money quicker e.g. £45 for fast delivery. If you don't need the money fast, opt to take it slow and save on fees.

What You Need To Know About Car Loans

Car dealerships often advertise a 'flat rate', these rates can look attractive, but are different from the annual percentage rates (APR) the banks quote. A 5% flat rate is roughly the equivalent to a 10% APR (doubling the flat rate gives you the APR). Always compare finance based on the total amount you'll repay.

Want a Cheaper Rate Than Your Existing One?

You need to work out carefully if a new, lower interest rate will be cheaper than your existing one. Older loans often carry a charge if you repay in full early, even if the interest rate is cheaper on the new loan, you could still end up paying more once you take the charges applied to your old one into account.

The best thing to do is find the lender with the lowest annual percentage rate (APR). The rates that are advertised are 'typical rates', meaning only about two thirds of people will actually be accepted at those rates. If you have a poor credit score, you could pay a lot more.

Want to search over 550 of the best rates?

You can compare over 550 loans at our loan comparison page. All the best lenders can be found, special internet rates and more, you can even apply online if you find the right one.