Locating Low-Rate Loans

Banking and Borrowing

12 July 2007 | 0 Comments

Taking one minute to find a cheap personal loan could save you £1,000+. We reveal the very latest Best Buys.

Before you even begin to shop around for a Best Buy unsecured personal loan, you need to do three things:1. Understand that 'unsecured' means that these loans aren't secured against your home (unlike mortgages, second mortgages and secured loans). In other words, if you can't keep up your repayments, then you can't lose your home -- although your lender may go to court to obtain a Charging Order against your property.2. Work out how much you need to borrow (and not a penny more) and how much you can comfortably afford to repay each month.3. Read the twelve tips in my article The Loan Arranger Rides Again.Having completed these three steps, you're now "smarter than the average bear" when it comes to personal loans, Boo Boo! Thus, armed with this new-found learning about loans, your next move is to check the whole market for personal loans to find a deal that's right up your street.So, where do you hunt? The simple answer is to check The Fool's unbiased, independent search engine. It does the donkey work in seconds, searching 150 different personal loans while you sit back and relax. To give you an idea of how much interest you can expect to pay, I ran three searches to see how much a small, medium and large loan would cost. Here are the results:Best Buy personal loans for £5,000 over three years(not including rip-off payment protection insurance!)LenderTotal amountrepayable (£)TypicalAPR (%)Masterloan (telephone only)5,470.566.1Barclaycard5,486.046.3Moneyback Bank5,486.046.3Alliance & Leicester5,493.966.4Best Buy personal loans for £10,000 over four years(excluding PPI) LenderTotal amountrepayable (£)TypicalAPR (%)Masterloan (telephone only)11,258.886.1Barclaycard11,300.166.3Moneyback Bank11,300.166.3Alliance & Leicester11,341.926.4Best Buy personal loans for £15,000 over five years(without PPI)LenderTotal amountrepayable (£)TypicalAPR (%)Masterloan (telephone only)17,373.006.1Barclaycard17,451.606.3Moneyback Bank17,451.606.3Alliance & Leicester17,531.406.4As you can see, top honours go to the same four lenders. In all three tables, Masterloan takes the top spot, Barclaycard and Moneyback Bank share second, and Alliance & Leicester takes the third of the Best Buy awards for loans.One final piece of advice before I go: think twice before taking out a personal loan to consolidate (roll up) your existing debts. In my pre-Fool days, when my spending was out of control, I did this repeatedly and ended up with three monthly repayments totalling around £550 a month, plus additional debts to boot. D'oh!More: Borrowing To Improve Your Home | Dodge This £90 Loan Trick

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