To get the best deal, shop around. In general, the more you borrow, the lower the interest rate will be, but rates vary from 7-20%. But be careful when comparing products as lenders calculate the annual percentage rate (APR) in different ways. Loans for specific items such as new cars are also available, often with lower interest rates.
When comparing APRs, make sure that you're comparing like with like. Don't pay attention to the monthly interest rates advertised by shops - these are always lower than the annual rate and can mislead you into thinking you've got a better deal than you really have.
Loans are repaid in monthly instalments over an agreed period. This amount of time is usually fixed and if you want to pay off the loan earlier you will probably have to pay a penalty. The longer the repayment period, the more interest you will pay, so go for the shortest one you can manage.
Flexible loans, which let you borrow and pay back at will, are becoming more common, but the interest rate charged is often higher.
The most important thing is to make sure you know exactly what the monthly payments will be, and how much you will pay back in total.
If your bank turns down your loan application, it is obliged to explain the main reasons for doing so. |
