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Low Interest Rate Does Not Always Mean Cheap Loans
Summary: Cheap loans are a reality and not a myth. However, a low interest rate in itself does not mean that the loan is cheap because there may be many other costs involved apart from the interest rate.
The general perception is that a loan that involves low rate of interest is beneficial. This, however, does not hold true in every case. Sometimes, manipulative lenders offer you very low interest rate but they raise the total cost of borrowing by charging loan arrangement fee and early repayment penalty. In this way, a consumer who is not aware of these things may think that he has got a good loan deal from the lender whereas the reality is very far away.
There is a concept of annual percentage rate or APR that has been specially introduced to counter the manipulative tactics adopted by some lenders. APR helps borrowers to compare different loans on an equitable basis. APR is the total cost of availing credit that a borrower has to pay to the lender, expressed in simple annual percentage. APR includes interest rate and all other costs and fees relating to a loan.
Since all the loans are expressed in terms of an APR, a standard practise in the UK loan industry, the loans have become comparable on equitable basis. Any borrower who wants to take a loan should compare it on the basis of APR, the best available measure of finding out cheap loans.
The low rate loans available with the banks and other financial institutions may require you to fulfill some conditions. The banks may ask you to provide a loan guarantee by placing your home as a security. This requirement becomes indispensable for the lenders when you want a large amount of loan, say £100,000. Lenders want to ensure that the loan that they are advancing to the consumer is backed by a concrete security. If you are ready to oblige a lender by giving your home as security, you can easily get low rate loans. In such a situation, the lender may also overlook any other shortcoming that you possess like a not so good credit rating.
In a bid to take cheap loans, you should not forget the real purpose for which you are taking a loan. It is very important that the loan fulfills your entire financial requirement and the ultimate purpose, whatever it may be. If you are confronting a situation where two loan offers are available, one slightly expensive than the other, then you should decide on the basis of collateral benefits that you are likely to derive out of two offers. The interest rate becomes unimportant in such a scenario.
Master Your Loan Management Smartly
Borrowers having signs of bad credit history like CCJs, IVAs, arrears, defaults, late bill payments face different difficulties in financial transactions. The grey patches in credit history create several problems. The availability of loans at the time of requirement becomes next to impossible. Consolidation loans available in the UK financial market helps the borrower to keep their credit scores in a healthy shape and make further loan availability options open.
Due to threat of property repossession, the tendency of most of the borrowers is turning towards the loans without residential property security. Even the homeowners are not the exceptions. There is a growing tendency among the borrowers in the UK to have loans with least risk factors. Elimination of separated mounting debts under the provisions of consolidation loans is proved to be easy and threat free option for borrowers caught in the debt trap.
Debt consolidation loans of unsecured category do not require any residential property security. These loans are immensely beneficial for the tenants, students and self-employed professionals who find difficulty to avail consolidation loans as they do not own residential property. Even the homeowners who want consolidate their credit card debt without risking their house can also take help of these loans. As these loans are available without residential property security tag, these loans are also called the risk-free loans.
The key advantages of unsecured loans for debt consolidation are syndication at segregation and single monthly repayment after merger. After consolidation, one lender works as a middleman and there is a fair chance to improve credit score if one maintains regularity in repayment pattern. It also leads to an effective debt management plan. The borrower does not find any difficulty to avail fresh loans if he repays the loan amount in the assigned time period.
Many lenders in the UK financial market offer unsecured loans for debt consolidation. The lenders have their own terms and conditions and repayment pattern. Hence, the borrower should compare loans with different lenders to have the purpose suiting loan plan. The advent of the online service in the financial sector has made the loan application easier. Henceforth, borrowers have to fill in loan application forms and research for a right lender at minimum effort. Just one click and scores of lending options come to fore! The borrower can select one amongst them which suit his budget and come with friendly terms and conditions.