For those of us with mortgages, or living in our own homes, finding cheap personal loans couldn’t be easier. Our banks and building societies are usually happy to oblige and let us borrow amounts from £3,000 to £50,000 at a lower interest rate than for unsecured loans. Some lenders will even provide finance for up to £100,000. Why? Because they know that if we don’t keep up our repayments, they have a stake in our home as their security.
But for those of us who don’t own our home, for whatever reason, finding cheap personal loans for these larger amounts is not quite so easy. Unsecured loans tend to range from £1,000 to £25,000. Perhaps one advantage of this is that the lender cannot turn us out of our homes if we are unable to meet the payments. However, because the loan is not secured, the rate of interest is usually higher than for loans secured against mortgages or home ownership. And if you find yourself in a position to repay the loan sooner than expected, you will often still be charged the full rate of interest.
When it comes to competitive rates for unsecured loans, nothing beats having a good credit history; particularly when you are borrowing sums of £7,000 upwards. So how can you make sure you get the best deals in cheap personal loans for these larger amounts? As always, you need to shop around, and a good place to start is the internet.
A price comparison website dealing in cheap personal loans will enable you to see at a glance what sort of APR you can expect for the amount you want to borrow – but don’t take everything at face value as there may be hidden extras. Consider this merely as a general yardstick. The amount you will be able to borrow will depend on your credit history, the lender and the loan product option you choose. Your earnings will need to be taken into account as well as your outgoings. The loan period as well will reflect your repayments. The longer you take to repay, the smaller the monthly repayments, but in the longer term you will end up paying much more in interest. Think carefully before you commit yourself to a life sentence of debt repayment. Even if your financial circumstances change, allowing you to pay off the loan earlier, the probability is that you will not escape those high levels of interest you initially signed up for.
If you are looking for a medium-sized loan of, say, £7,000-£10,000, perhaps for a new car, bank loans and loan finance schemes repaid over a fixed term of up to ten years might offer you the best interest rates. Alternatively most of the larger UK supermarkets offer cheap personal loans and are in fierce competition to keep their APR under 9% for amounts below £7,500 and under 8% for loans up to £15,000. You should also look into borrowing such a sum through your credit card. Depending on your financial history, some credit card companies will consider lump sum loans that undercut the cheapest rates generally available; as well as giving you flexibility over repayments so that you don’t have to pay a set amount each month. And all without incurring penalties. For example, you could borrow £8,000 at 7% over 4 years – an offer you are very unlikely to encounter elsewhere.
