Taking The Long View On Cheap Loans | Personal Finance

By RussellR.Collins
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Hardly a day goes by when you don't find your inbox overflowing with yet another wave of offers of cheap loans. Remarkably, companies seem to know your circumstances and needs, and have kindly tracked you down to offer you the best deal they have ever done. Just in case you miss their message, you'll probably find several versions of it available on web pages in the form of banner advertisements.

But how is it possible to sift through all of these offers, which seem so readily available, and decide for yourself what type of loan will serve your needs best. With so many types on offer, it can seem a daunting task.

There will, naturally, be a variety of reasons why you will be eligible for different rates and terms. Your employment and credit history, whether you own property and the time scale for repayment will all make a significant difference.

Another factor which significantly affects the type of loan that you will be able to obtain is the speed with which you need access to the funds, and also of course, the time period over which you will pay it back. For example, a quick and easy solution for many is the 'pay day' loan. This is where you receive a relatively small loan, that is payable from your next pay cheque. Because of the short period of time, the interest has little time to accrue, although the rate will be substantially higher than those loans payable over much longer periods.

Secured loans, however, always offer the most competitive terms and rates of interest, since in these cases the lender has the knowledge that their money is backed up by the property or secured capital, and as such, is relatively safe. Lenders compete fiercely within this market place.

In order to find the cheapest loans available, ideally you should be in well paid, full time employment, with a good credit history and property against which the loan can be secured. If you are fortunate enough to be in this situation, then you would be wise to shop around, since you will be considered a very safe borrower, and lenders will be very keen to attract your attention.

There is an increasing market today, though, for borrowers who do not fit this idealistic profile. As a result, companies are addressing their needs by offering alternative packages, which generally compare far less favourably, but between themselves, can still vary fairly significantly. Sadly, in many cases, the very people who would benefit most from spending time shopping around for the best deal on a loan are in need of the funds too rapidly to spend time doing the research first.

Indeed, often it is the case that the borrower is so relieved to find someone who will lend at all, that they take the first offer made. What may seem like a good deal at the time could result in being committed to paying a far higher rate of interest than was necessary, and paying far more in the long term than if they had spent more time shopping around to compare deals.

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Before you make a decision on agreeing to any type of loan online, make sure you check out Mollie Greens' informative guide on the different types of cheap loans currently available and where to find the best offers on cheap mortgages.

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