Cheaper loans on the horizon?
The credit crunch has made finding cheap loans considerably harder for many people. Although loans themselves are still readily available, finding an APR even in single digits has been incredibly difficult for many over the past year.
Building Societies, Banks and other financial institutions have become much more wary about lending money to people. To make matters worse, some have pulled out of the market completely reducing competition and paving the way for more expensive rates. Payment Protection Insurance has also been restricted leading many lenders to recoup loses into the actual interest rate itself.
Luckily there are some signs of light on the horizon for people who have a good credit rating but have struggled to find a loan to match. Several well known companies are offering very promising ‘typical rates’. A typical rate must be offered to two thirds (66%) of all successful applicants.
Amongst the companies offering these rates are popular supermarket retailer Sainsburys. The finance division of the company are offering loans at a rate of 7.9% APR providing you sign up to the Nectar loyalty scheme. This isn’t much of a catch however – the scheme is free, easy to sign up for and can actually save you money on various services such as electricity and telephone bills. The minimum loan amount to receive the low APR is £5,000.
Similarly the AA are offering an 8.0% APR loan providing you sign up through Moneysupermarket.com and apply for a minimum loan of £7,000. If you’re looking at borrowing far less than this, the Post Office has filled the gap, offering an appealing 13.9% on loans as low as £2,000. Abby Personal Loans offer an even better 8.9% for the same minimum amount, but you do need to be an Abby customer to take advantage of their offer.
As with any loan, it’s your credit rating that will finally decide your rate. These rates are given to the majority but not all successful applications. If you’ve affected your credit score in the past there’s a good chance you’ll either be rejected or offered a much higher rate.
It’s also important to watch out for the small print and make sure you aren’t paying hidden charges for administration or setup costs.