The Importance of Comparing Loan Rates Before You Apply
Getting a loan is not a decision that should be taking lightly, there are so many things to think about such as
- How will this affect my credit score?
- Will I be accepted?
- Should I go with the first deal I see?
- What does APR mean?
I have teamed up with Clear Score to give you the information you need before making such a big decision.
What is APR?
APR stands for Anual Percentage Rate, this simply means how much interest you’ll pay back each year. For example, if you get a loan for £100 over 12 months and the interest rate is 10% then the cost of credit is £5.26 meaning the total you pay back is £105.26.
Watch out for high APR rates, I have seen some over 1000% which means you pay back more than double – Yikes!
Is there anything I should do before applying for a loan?
Is there an alternative you could of a loan? Could you sell some items that are gathering dust? Maybe borrow the money from a relative – just make sure you can pay them back as a family feud is the last thing you want!
If a loan is the only option for you make sure you use a reputable lender and not a loan shark.
Also, check your credit score. I use Clear Score and have been with them around 2 years now. They’re free for life and a great way of keeping on top of your finances, they offer free tips and advice for improving your credit score.
Why should I compare a loan before I get one?
There are so many companies out there promising you the best offer for a loan but the only way to know for sure that you’re getting the best deal is to compare the loans side by side, just as you would for your car or home insurance.
USwitch is the best to use to compare loans. They show the results clearly to make sure you understand just how much you will pay back in the long run and ensure you’re getting the best deal for you.
Have a clear figure in your head how much you need to borrow and make sure you don’t apply for multiple loans at once, this will damage your credit score and lower your chance of being accepted.
Make sure you don’t borrow more than you can afford. Set a budget of how much you can make in repayments each month before you check if you’re eligible for a loan, if you don’t do this then you risk falling into debt.
Is there anywhere I can go for more tips and advice regarding a loan?
Clear Score is the place to start. Check your credit score and take it from there.
Then head to USwitch to check out their comparison tool, that way you’ll know you’re definitely getting the best deal on the market.