There are so many lenders available that it can be rather daunting trying to pick the lender that will be the best. Although there are many factors that might be important to you in a lender such as them having a good reputation and good customer service, often it is the cost that is key for us all. Obviously, no one will want to pay more than they have to and so how can you find the cheapest?
Choosing the right loan
It is important first though to pick the right sort of loan. You will know that there are many different types and you will need to think about which will be the most suitable for your needs. Consider how much you want to borrow and whether you want regular repayments and this should help you to pick between them. Howe good your credit rating is will also be a factor as will what you are using the loan for. Some loans, such as mortgages are designed for a specific purpose. A payday loan and guarantor loan will be available for those with a poor credit record. A personal loan has regular repayments but an overdraft and credit card do not. If you just want a small amount of money then an overdraft, credit card or payday loan will work whereas if you need a larger amount you will need to consider a personal loan.
It is important to choose the right loan because it will help you get the best value for money. You will also get the right amount of money to suit your purpose and you will be able to decide on what sort of repayments you want as well. Once you have chosen the best loan type then you can pick between lenders to see which offers it at a good price.
Picking between lenders
It is easy to think that the lender with the lowest advertised interest rate will be the cheapest. Therefore, you might look at a comparison website and pick the cheapest form there. Although this can be a useful tool it does not tell the whole story. Firstly, unless the rates you are comparing are the APR then they do not allow for any other costs of the loan. The interest rate is often just one part of the loan charge and there may be additional set up fees as well. If you look at the APR figure this includes these fees and therefore is a better way to compare the lenders.
There are also fees that you may be charged. You might, for example make a late repayment or miss one and there will be charges for this. If you decide that you would like to repay the loan early there may be an early redemption fee. Although you probably hope that you will not have to pay these, it is worth being aware of how much they are. This will be another factor that will make picking between the different lenders a bit easier.
It might seem like a lot of hard work, but it is well worth doing. You could find that you will save a significant amount of money as a result of doing the work and therefore you will really gain from it. A few hours work could save more money than you could be paid in that time, depending on how much you are borrowing. The more you are borrowing the more you will pay in total in interest and charges and therefore the more worthwhile this research will be. However, even a small amount of research could save you some money.
Some people choose to use an independent financial advisor to help them with choosing between lenders. This is something that will cost money but it could be worth it. Find out how much their hourly rate is and then consider whether it is worth it. If you are taking out a large loan then you are more likely to be able to make a bigger saving compared with a small loan. If you have the time to do the research yourself then you may rather save the money, but you will find that financial advisors will know about more loans than you and they may even have access to lending that you cannot get because you have to apply through a financial advisor. You might want to use websites instead but remember that they can be biased. Lenders will pay commission on leads to websites that recommend lenders and so those websites may only choose to list those lenders which pay out the highest amounts of money. You will find that all of them are limited in how many companies they list as well, which means that you will not be getting the full selection.