Finding the Cheapest Personal Loans
Finding the cheapest personal loans is all about understanding what factors make a loan expensive or cheap. Usually, the loan that could be identified as the cheapest will be the loan with the lowest interest rate.
When talking about loans, the interest rate is usually termed the “Annual Percentage Rate” or APR. At its simplest, the APR is basically the interest rate payable over a yearly period divided by the number of payments due in that year.
Currently, the lowest APR rates to be found in the UK are between 7 and 8% but this will vary depending on the current bank interest rate set by the Bank of England. If the Bank of England increase the base rate, then most lenders will also raise their lending rates.
Cheap Personal Loan Reviews
From this is easy to identify a loan which is say 10% APR will cost more over the duration of a loan which is 8% APR providing the loan is paid back over the same term. The reason for this is that naturally more interest will be accrued if the loan is taken over a longer period of time.
At its simplest, calculating your monthly payments should be a matter of dividing the APR by twelve to get your monthly interest fee then applying this to the loan:-
- Loan Amount: £1000
- Loan Term: 12 months
- APR: 10%
- Monthly interest rate: (10 / 12) = 0.83%
- Monthly interest: £8.30
- Monthly payments: (£1000 / 12) + 8.30 = £91.63
- Total repaid over 12 months: £1099.56
Unfortunately, the above example can only be used as an idea of what you might expect. The real amount is likely to be a little higher due to the effects of ‘compound’ interest. This is a term used to describe the interest that is charged to interest that’s all ready been added to the loan. However, the above example can work to give you a basic idea. Most lenders do have loan calculators on their websites which help you to get more exact figures.
Overall, finding a cheap personal loan will be about looking for the lowest interest (APR) payable. There are several ways to check this:-
- Browse lenders websites
Most lenders have a website with easy to use loan calculators and often clear advertised APR rates - Look at comparison websites
There are a number of comparison sites which help to put lenders rates all on one easy to view page. This can help to more easily compare the loans available. - Visit high street banks and building societies
You can of course visit high street lenders or call them to enquire about their loan rates
Whichever option you find best, finding the cheapest personal loan is essential to avoid paying more interest than is necessary on any borrowing you wish to make.
Cheap Personal Loans
If you are looking for a cheap personal loan then its wise to check out whats available and be fully informed before making a decision.
There are several different ways to choose a personal loan but taking up the first offer that drops through your door or reacting to the first ad you see on TV is not advisable. The best action you can take is to do some homework and check the options available to ensure you end up with the cheapest personal loan available.
Cheap Personal Loans UK
So finding a cheap personal loan may not be as straightforward as it sounds. Over the course of the coming weeks and months we will review different cheap personal loan options to enable you to make a better informed decision. Deciding to take out a personal loan is quite a commitment and depending on whether you can get a secured or unsecured loan will also determine how much you have put on the line.
We hope you find this site beneficial in your search for cheap personal loans and, whether it be to go on a nice holiday, to consolidate existing debts, or to have a new kitchen fitted, that you will ultimately find the right loan for you.
