There are many different reasons for obtaining a secured loan, from paying for home improvements to consolidation of debts to lower monthly payments. Quite often the need to borrow money is urgent and this is when people tend to rush into a loan agreement without fully understanding all the options available to them. Finding a lender for a secured loan is a major decision and hastiness can often times result in costly mistakes that could have been avoided. Let us look at how to avoid making one of the most common mistakes and save yourself thousands of pounds.
One of the most common costly mistakes made by people looking for a secured loan is accepting a higher interest rate when they could have qualified for a much lower rate. There is a wide range of Annual Percentage Rates (APR) in the UK loan market. Too often when someone is under stress to obtain some money, or if they have bad credit, they make the mistake of accepting the first offer that comes along. This can result in paying a lot more money in interest charges than necessary and can in the long run cost thousands of pounds extra. Let's look at an example:
For a loan comparison example let us take a £25,000 loan over a 15 year term. If you received a 10.5% APR instead of an 8.5% APR over the course of the loan, you would be paying an extra £5,430 in interest! Even a 1% difference in APR would save you £2,753. It quickly becomes clear that a small change in interest rate can make a huge difference in the amount of money you keep in your pocket.
Sometimes the lowest APR isn't the lowest APR
Be careful of websites and lending companies that advertise unusually low APR rates. There are unscrupulous lenders out there that offer very low initial APR's that down the road turn into very high APR's. Another common practise is to advertise a very low APR but it is then mandatory to purchase the companies payment insurance. This hidden fee of having to take the mandatory insurance can turn an advertised APR of 6.4% into an actual APR of 9.0%.
How to find the lowest APR Secured Loan
So what is the easiest way to find the lowest APR secured loan and not get ripped off? The best advice is to use the services of a good secured loan comparison site. One advantage of using a good comparison service is the ability to instantly compare over 250 loan plans and options provided by the top lenders and high street banks. Having a comparison of quotes matching your specific requirements is key to finding the lowest APR possible. The best online comparison sites also offer the advantage of no search fees, no obligation and most importantly no initial credit check.
By taking the little extra effort to do your research when choosing a secured loan provider, you will avoid making costly mistakes and save yourself thousands of pounds.
Steve Jackson is a freelance writer who specializes in loans and financial services. He is currently assisting Secured Loan Review UK as a finance specialist. The Secured Loan Review offers continually updated loan comparison sites and resources on finding the lowest UK Secured Loan rates available. For more information please visit http://www.securedloanreview.co.uk |
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