If you need to borrow money here are 5 simple tips to ensure you get the cheapest loan rates
We caught up with David Allan and loan comparison experts Lending Expert to offer us some simple tips and ideas to help us get the cheapest rates when borrowing money.
- Firstly, ask yourself do I really need a loan?
It’s obvious really, but do you really need to borrow money to get what you want? Can it wait while you save up for what you need? Often delaying the gratification of the purchase often makes it much sweeter when you come to buy it knowing you’ve spent the time and effort to save up for it, without having to get into debt.
When possible paying for what you need with your hard earned cash is the best way forward!
- Borrow and beg from friends and family.
You may find that if you only need a small amount, then friends and family may be on hand to help you out. The best thing about this arrangement is that often parents will borrow you money because they love and care about you, and as a bonus they will probably not expect to be paid any interest on the loan either.
A word of caution – take borrowing money from friends as seriously as you would a formal arrangement with a lender. You wouldn’t want to compromise your relationship with them because you failed to repay then what you owed or went against what you agreed.
It may also be prudent in this instance to get something written up in writing to outline what you’ve agreed to help clarify things if you run into any issues later on.
- Sort out your credit file
When it comes to getting a loan or any type of credit then the applicants with the finest of credit files often get the juiciest and cheapest rates. Having an excellent credit score demonstrates to the lender that you’re a safe bet and good to lend to. Therefore having a good to excellent credit rating is essential to unlocking the cheapest rates when it comes to loans.
For you, this means take the time to ensure your credit file, history and score is the best it can be before you apply for a loan. This may involve paying any outstanding CCJ’s or simply rectifying any errors found on your file.
There is now a wide range of online services that allow you to check out your credit score for free.
Our favourite credit service is Noddle.co.uk – the best of all this service is complete FREE, no free trials, no subscriptions and no messing about.
Most of the credit monitoring agencies also provide free guidance and help on how you can improve your credit score, and deal with any credit issues found on your record.
- Use a loans smart search facility
Most of the major comparison sites use smart or credit matching when you compare loans with them.
The advantage of this is that you’ll only be presented with the cheapest loans that match your personal circumstances and credit score, and not necessary the lowest “headline” rate that is displayed prominently at the top of most loan search results.
Using this type of service you’ll avoid annoying failed credit applications, and will massively increase your chances of being accepted for the loan you need.
- Consider your local credit union
If you are thinking of taking out a small or short term loan, then you may wish to consider your local credit union as an alternative means of credit.
Credit unions have started to become a more popular form of credit and are a far cheaper alternative to using a payday or short term loan. There are an estimated 500 credit unions in the UK now and have a presence in most cities. If you’ve never used one before they may be worth investigating.