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Your Questions Answered

Not surprisingly, we get lots of questions about cheap loans. These range from requesting help in finding them, whether they are the best option in different circumstances and what types of loan deals are available for different types of applicants

So here's a brief round up of our answers to the most common questions. Don't forget that individual circumstances will differ between applicants and all the options we describe may not apply to every person.

Which types of loan are the cheapest?

The cheapest loans are the ones that are repaid quickly and carry the lowest rates of interest. So you should plan on repaying your debts as quickly as you can. The critics of loans say that a loan repaid over 10 years would cost you more than three times as much as a loan repaid over 3 years. Well that's the case because you have the loan available to you for three times longer and the way repayments work, means that the early years of loan repayments are contributing more towards interest repayments rather than paying off the capital.

What's the best way of getting a cheap interest rate?

Well firstly you need to put yourself in the position of being offered a cheap deal. That means understanding your own credit situation and making sure you apply to lenders who offer loans suited to your situation. If you have a great credit record, a steady job and plenty of disposable income, then there's no reason why you shouldn't get the cheapest deals going. You'll represent a very low risk to any lender and they will have no need to increase the costs of the loan to cover any risk of you not repaying the loan. Applying through a loan broker gives you access to a wider range of loans and increases the likelihood of putting your request in front of the right type of company.

Why don't I qualify for the cheapest rate?

In order to qualify for a lender's best cheap loan you need to fall into their "low risk" category of borrowers. If you are not being offered their cheapest rate, then just ask why. They may not be able to tell you exactly why, as their credit scoring systems can be complicated, but a well trained advisor should be able to give you a rough idea of the reasons you are not qualifying. It could be related to your existing debts, your work situation, or the amount of money your earn in relation to the size of the loan.

Is a loan always the best option?

Although we only provide loans, they are not always the right solution to a particular borrowing problem. If you only need a loan for a short period to make a purchase, then buying the item on a credit card with an interest-free period could well be the best option. Even a cheap overdraft may be cheaper if you have access to one. But not everyone has the full range of borrowing options available to them and for longer periods of borrowing, a loan will usually be your preferred option.

I've read that loans repaid quickly are the cheapest, why is that?

If you repay your loan quickly you'll be charged less interest, so the total amount you'll need to repay will also be less. Also if you make larger repayments earlier, then you start to repay the capital amount you owe sooner and incur smaller interest charges.

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