Low Cost Loans
Low cost loans are out there, if you know where to look
If you're borrowing money, look for low cost loans: there are big differences between different lenders' offerings, and if you're borrowing a lot of cash a slight difference in the interest rate could mean that you pay several hundred pounds more than you need to. It pays to shop around.
Banks and other firms don't lend you money out of the goodness of their heart: they make a profit by charging interest on your payments. However, different lenders take different amounts of interest, and those differences can be dramatic – especially if you're borrowing a lot of money over a long period of time. Look for low cost loans and you'll pay a lot less.
Low cost loans aren't free – everybody charges interest – but if you shop around you can get extremely low interest rates. Many supermarket banks and web sites are currently offering APRs of 6.9% or lower, while high street banks charge much more. To take just one example, if you borrow £7,500 over 5 years with Tesco, its APR of 6.9% means you'll pay a total of £8853.60; go for the Bank of Scotland with an APR of 9.9% and you'll pay £9,595.80 – almost £750 more. Wouldn't you rather hold onto that cash than give it to the bank?
As you can see, just 3% difference in APRs can be a big chunk of cash – yet plenty of people borrow money at APRs of 14%, 19% or even 21%, simply because they don't shop around.
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