Buyers' Guide - Personal Loans
If you want to borrow some money for a new car or to do up your house a personal loan is often the answer. But do you know how to get the best deal? Let Moneywise help with our Buyers' Guide.
To get a competitive rate on a personal loan, your starting point should be a price comparison site. It's a good idea to check several in case they have exclusive deals.
The amount of interest you'll be charged will depend on the amount you want to borrow and how good a credit risk you are.
Because interest rates are tiered, it may make financial sense to take out a bigger loan to qualify for a cheaper deal and pay back what you don't need.
Be aware that you may not get the advertised rate. This is a ‘representative APR' and only has to be available to just over half of those who successfully apply.
Also consider how long you have to repay the loan - a longer term means smaller monthly repayments but you'll pay more in total.
You can sometimes borrow money at a lower rate of interest if you take out a secured loan, but think very carefully before you go down this route. If you can't keep up the payments your home could be repossessed.
Whatever you do, don't take out a payday loan because the interest rates can be sky high.
Finally if you're only borrowing a small sum and can repay it within a year or so, you could try a credit card that charges 0% interest on purchases instead and not pay a penny for your loan.