How to get a low rate loan image

How to get a low rate loan

Personal loans deals, just like credit cards and bank accounts, vary widely.

But securing the best terms and lowest interest rate possible can make a massive difference to the amount you repay.

So it makes sense to shop around. Here are our top tips on getting the best possible low rate loan for your individual circumstances.

How to choose a loan

When hunting down the best loan for you, the first step is to decide what kind you need.

Ordinary personal loans can be taken out for amounts between £1,000 and £25,000, with the lowest interest rates generally reserved for those borrowing between £7,500 and £15,000.

Homeowner or secured loans, meanwhile, are available for amounts ranging from £5,000 to £100,000.

However, the amount you personally can borrow will depend on your income, your credit score and your existing credit commitments, as well as the equity available in your property should you opt for a secured loan.

How to get the best deal

As mentioned above, the lowest personal loan rates are often limited to loans of between £7,500 and £15,000.

Consequently, if you were thinking about borrowing £6,000, it may be worth increasing the amount to £7,500 to take advantage of the cheapest interest rates.

If you need to borrow as larger amount, on the other hand, you may find that you can get a lower rate by using your home as security.

Just remember that your property will be at risk if you default on the repayments.

Other points to bear in mind include that you will often pay a higher interest rate to borrow over a shorter term - most of the top deals, for example, require you to repay the loan over between three and five years.

However, you may still pay less interest overall by accepting a higher rate over a shorter term because the interest has less time to build up.

That's why you need to look at the total cost when comparing your options.

How your credit score affects the rate you pay

Lenders take your credit file into account when deciding what interest rate to charge you, as well as how much you can borrow.

And only those with high credit scores will be accepted for the best deals, which currently charge representative APRs of as little as 5%.

If your credit score is not up to scratch, you will usually pay a lot more for credit - even if they are accepted as customers by the market leading loan providers, while those with very poor scores will often be refused altogether.

Lenders take your credit file into account when deciding what interest rate to charge you, as well as how much you can borrow.

How MoneySuperMarket can help

Whatever type of loan you choose, shopping around for the cheapest deal is the best way to ensure that you pay as little as possible for credit.

Whether you want a personal or a homeowner loan, you can do this quickly and easily by using the MoneySupermarket loans channel to compare hundreds of different loans from a wide range of lenders.

The Compare Loans tool allows you to find the best deals for your individual circumstances in just a few minutes - all you have to do is enter a few details such as your name, your annual income and the amount you want to borrow.

What's more, you can use the website to find out whether you are likely to be accepted for a particular loan - and at what interest rate.

And if you are still unsure, you can sign up for a free credit reporting service to see for yourself what information banks and other lenders get when they search your file.

Moneysupermarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this broking service. Instead we are usually paid a fee by the lenders – though the size of that payment doesn’t affect how we show products to customers.

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