There are almost 80 different lenders currently offering personal loans. Here's one good example that tops the best buy tables in more ways than one.
This article was originally sent to Fools as a standalone email in our 'Good, Bad And The Ugly' series.
There's one piece of advice that we never tire of repeating here at Fool.co.uk, which is always shop around before buying. Just as you'd get several quotes for home improvements, so you should do the same when it comes to choosing financial products. Ideally, you should aim to search the entire market in order to choose the provider and product which best suit your needs.
For example, if you're after a personal loan, then almost eighty different lenders are after your business. Of course, checking every deal is beyond even the most patient of us, which is why search wizards are such a godsend. All you need to do is enter a few details and, as if by magic, the Best Buys appear. (Magic? Wizards? This is all getting a bit Harry Potter for my liking!)
Unsurprisingly, after fifteen years of studying Best Buy tables for a living, I've seen a lot of players come and go. Even now, I keep a mental list of firms and products which I classify -- in Spaghetti Western-style -- as "the Good, the Bad and the Ugly".
When it comes to personal loans, Fool partner Moneyback Bank tops my 'Good' category. Since its launch by Alliance & Leicester in June 2005, Moneyback Bank has firmly established itself as a market leader for loans. Here's why it get my seal of approval:
1.Highly competitive interest rates. To borrow 5,000 over three years, you'd pay just 517 in interest with Moneyback Bank, for a total amount repayable of 5,517 (6.7% typical APR). You won't find a cheaper unsecured loan for this amount anywhere else. Indeed, at the other end of the scale, the same loan would cost a total of 6,533.28 (19.9% typical APR, with a four-month payment holiday) from Lloyds TSB. Ouch!
2.You don't need to be an A&L customer to apply. I dislike financial products which require you to buy another product or be an existing customer in order to qualify for the best deals.
3.There are no arrangement fees.
4.You can apply online and use your loan for most purposes, such as buying a car, home improvements, debt consolidation, taking a holiday, getting married, etc.
5.Moneyback Bank won the prized Moneyfacts Award for Best Personal Loan Provider 2007. In my view, there can be no higher praise!
By the way, around seven in ten (70%) personal loans are redeemed early, so do watch out for penalties for early settlement. Moneyback Bank charges one month's interest for early settlement; some other lenders charge up to two months' interest.
Finally, you may feel the need to take out payment protection insurance to cover your monthly repayments. If so, then always shop around for this cover, as independent providers sell it at a fraction of the price charged by lenders. After all, why pay five times as much as you need to for this protection?
More: Get a great deal in the Fool's Personal Loan Centre | How To Find A Cheap Personal Loan | The Loan Arranger Rides Again