Key Things To Remember When Applying For A Loan
Annual Percentage Rates Have Been Steadily Declining
Since the year started, the representative annual premiums/percentage rates (APRs) offered to clients by lenders with the best loan deals have been on a steady decline. This may come as great news if you are looking for a loan that will not be expensive to maintain.
Today, borrowers who are looking for loans ranging from £7,500 – £14,500 can take advantage of the cheap APR rates that have been in effect since November 2008.
For example, if you are looking to take out a loan of £7,500 to be repaid over a period of 3 years, Sainsbury Finance is offering this loan at an APR of 7.1%. This is much less than the APR of 8.33% they were charging last year. For this loan, you would be making monthly payments totalling to £231.16 per month which means that your loan charge will be just £822.
Alliance & Leicester on the other hand currently have a representative APR of 7.2%. This means that if you took out a loan of £7,500 for a period of 3 years from this lender, you will be making monthly payments totalling to £231.48. This means that your loan charge will be just £833.
Check Your Credit Rating
Depending on your current score, some lenders may refuse to offer you a loan. In some cases, you may find a lender but they may hike their representative APR in your particular case especially if you have a poor credit score.
The best way to understand if you will be offered a loan at the representative rate advertised by a lender is to first check your credit score.
Avoid Making a Lot of Loan Applications
If you have not carried out research on the lenders with the most affordable APRs, you may be temped to try your luck with multiple lenders all at once.
This is not recommended since any application that you make will show up on your credit score. If there are too many rejections on your credit score, lenders may refuse to offer you a loan even when your score qualifies you for the credit you are seeking.
Before taking out a loan, or quick commercial loans you can check out what APRs you may be offered by different lenders without destroying your credit record by visiting Nationwide.
At the moment, Nationwide has a representative APR of 7.3% – just a little bit more than other leading lenders. If you take out a loan of £7,500 for 3 years, you will be making monthly payments totalling to £231.81. This means that your loan charge will be £845 which is just a paltry £23 more than the loan offered by Sainsbury Finance. Note that this loan option by Nationwide can only be gotten through www.moneysupermarket.com.
Direct Loans Applications from a Lending Institution May Not Always Be the Cheapest Option
Dealing directly with a lender does not mean that you will be always be offered the cheapest loan rates.
For example, as mentioned earlier, the Nationwide rate mentioned earlier is only available to borrowers who apply through the bank’s website.
On the other hand, you can only take advantage of the 7.2% rate offered by Alliance & Leicester if you apply your loan through loan price comparison websites. If you apply directly through the bank, the rate you are offered may be different.
The situation is the same if you are looking to acquire a personal loan from Santander. Santander currently offers loans at a representative APR of 7.3%. If you borrow £7,500 for 3 years, your monthly payment will be £ 231.81 which will mean that you will be charged £845 for your loan. However, the APR rate mentioned above is not available to borrowers who approach the bank directly.
You Can Save More by Borrowing More
Since loan rates tend to be lower if you are borrowing more than £7,500, if you need £7,000, it will be cheaper if you borrow slightly more than you need.
For example, if you are looking to borrow £7,500 for a period of 5 years, the cheapest APR on the market is 7.2% which means that your loan charge will be £1,405. However, if you borrow a loan of £7,000 for the same period of time, the cheapest APR you can find is 8.5% which means that your loan charge will be £1,554. Based on the figures above, you would be better off taking the extra £500 and investing it towards your loan repayment.