Finding the cheapest loans

Finding the cheapest loan will depend on both your circumstances and the type of loan you wish to take out. Obviously a loan, like anything else, will vary from type to type with the company behind the finance assessing each customer on a case-by-case basis. Because of this your circumstances may mean you are applicable for some loans, not others – which will affect how cheap you can obtain the line of finance. Primary factors which determine your loan type are:

Secured or Unsecured

In a previous article we discuss un-depth how security applies to a loan. If you are a homeowner you will be able to provide security to the lender for your finance. This means the lender has a less-risky proposition and this will be reflected in the amount of interest they charge, generally a lower rate. This means that if you wish to obtain a loan for whatever purpose (buying a car, home improvement, taking a holiday, consolidating debts etc) you should aim for secured finance if possible – and this will most likely be the cheapest deal. Unsecured loans therefore are charged a higher rate of interest in addition to tenant loans (clearly if you are a tenant without your own property you will be unable to offer any type of security whatsoever).

Bad Credit or Standard lending

Many standard lenders would not wish to provide loans to anyone with a bad credit history. The reason for this is primarily because the company is unsure the finance will be paid back. People with bad credit history can still obtain loans however as there are specialist companies who provide such services. They will do so at a premium however, with typically a higher Apr (annual percentage rate) being charged than for a customer with a good rating. Therefore having a solid credit history is a vital part of obtaining the cheapest loan possible.

Shopping around – like anything, the service, and amount of money charged for it, will vary from company to company. There may be special deals or offers to look out for that can save you money. Therefore it is advisable to compare rates and shop around to find the cheapest loan providers. This can be done quickly and easily online from a range of different websites offering loan comparison facilities.