Secured loans are not always cheap, however, a little extra homework will help you avoid being trapped in a cycle of debt which is often difficult to break out of. Study the market carefully to get the best deal, looking for the lowest possible interest rates – payable in the most reasonable amount of time.
Banks are not the only legal source for borrowing money now days. The interest rates that banks offer can be less than their counterparts, but there are many finance house offering very competitive rates for secured loans.
Most interest rates are upwards of 7%. But some credit cards can offer less than three percent, but only for a short period. In fact, almost all credit cards give new joiners a one year offer. This means that there is absolutely no interest for purchases made on the first year. The snag is that credit card ‘loans’ are limited to buying groceries, appliances, and other similar products and select utilities. You still have to shell out cash to pay for the cable guy or other services.
This 12-month reprieve, however, is slowly being copied by some banks. Some banks allow new customers a small overdraft (less than £3,000) payable up to a year. You could look at this as a kind of short-term loan. The only condition is that you deposit a fixed amount in your account each month.
another lending route that is getting positive attention is Zopa. According to its website, Zopa has humanized money by removing banks in the equation. People can sign in as lenders (who get ‘lovely returns’) or borrowers (who get loans at lower interest). People can borrow a minimum of £1,000 payable in two years at 5.9 percent interest and a maximum of up to £15,000 payable in five years up to 7.6 percent interest. Zopa claims to have no hidden charges and no early repayment fees. Speaking of credit checks, make sure to have one before you approach any lender. This will prepare you on how to respond to possible questions. It will also allow you to make corrections on wrong information about you.
Also remember to check where you’re getting your advice from. Don’t be deceived by lender websites with offers that seem too good to be true — because they usually are. Even financial advisers will be biased in favor of one lender or another. The best sources will probably be government sites which will offer impartial advice. They’ll also have legal advice for you if you need it.
Consumers and lenders will forever have conflicting interests when it comes to secured loans. The former wants to borrow with the least interest stretched over the longest period of time. The latter will want the most they can get as fast as they can get it. As the consumer, it’s up to you to find a way to make sure the cards are stacked your way.
If you are looking for a Secured Loans, click here to apply for a quote.