Cheap Is Not Necessarily Nasty In The Loan World

Cheap Is Not Necessarily Nasty In The Loan World



Cheap is​ Not Necessarily Nasty in​ the​ Loan World
The number one consideration when looking for personal finance should be how much of​ your hard-earned cash a​ loan is​ going to​ relieve you​ of .​
If you​ see a​ loaf of​ bread in​ a​ shop that costs 60p and a​ seemingly identical loaf right next to​ it​ for 90p,​ you’d be faced with a​ question: Should I​ choose the​ cheaper one,​ or​ is​ it​ cheaper because there’s something wrong with it,​ in​ which case should I​ go with the​ 90p one? Some people would instinctively buy the​ cheaper one,​ others the​ more expensive,​ depending on​ the​ reasoning .​
After all,​ one of​ them might simply have the​ wrong price on​ it .​
Similarly,​ denim is​ denim but if​ a​ pair of​ jeans has a​ designer label on​ it,​ it​ can cost many multiples of​ the​ cost of​ an​ unbranded pair.
So can this strange human quirk be applied to​ all areas of​ spending? For example,​ is​ there going to​ be any difference between a​ loan with an​ APR of​ 8% and one with 16%? in​ other words,​ should the​ cheapest loans be snapped up or​ avoided? Boiled down to​ basics,​ money is​ money,​ and if​ you​ spend £100 interest on​ a​ loan it’s better than paying £101 .​
However you​ really need to​ look into the​ details of​ the​ loan to​ be able to​ assess what represents good value .​
For example,​ is​ the​ low rate for an​ introductory period only? Are you​ looking for a​ loan designed for high-risk borrowers when you’re a​ low-risk borrower (i.e .​
you have a​ good credit rating)? Are there charges for paying off the​ loan early? Are there conditions that apply to​ low rate loan,​ thatmay not apply to​ the​ loan you​ need .​
a​ common criteria is​ the​ size of​ the​ loan,​ with larger loans often attracting lower rates of​ interest.
It may sound like stating the​ obvious,​ but the​ cheapest loan is​ the​ one that costs you​ the​ least to​ pay off,​ not the​ one with the​ lowest rate .​
And your personal circumstances could entitle you​ to​ a​ loan that costs much less than it​ would for someone else .​
But don’t get into the​ mindset that a​ more expensive loan must in​ some way be better,​ as​ the​ chances are it’s probably simply expensive.
The best advice is​ to​ think very carefully about what you​ need,​ ask as​ many questions of​ the​ lender as​ possible and take a​ view on​ the​ most likely future situation you​ will find yourself in​ .​
By this we mean that there is​ little point in​ paying extra interest to​ get the​ flexibilty of​ paying a​ loan off early,​ if​ you​ are highly unlikely to​ be in​ the​ situation of​ making an​ early repayment.




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