With so many finance options available for borrowers, deciding on the right one can be time-consuming. Whilst some are self-explanatory, others may need more explanation of what they are for and why you might need them. Whether you are looking to borrow in the short or long term, you won’t want to apply for the first product you see, so to help, here is our quick guide to comparing finance products online.
Seek Trusted Lenders
You should always use trusted lenders to ensure you are treated fairly as a customer. Not only will it ensure you are assessed fairly during the approval process, but it will also mean you won’t be overcharged for a service. As there are many out there, always look for those that are Financial Conduct Authority (FCA) approved. The FCA are the industry regulator, and you can find the names and authorization numbers of lenders on their websites. This way, whether you need a payday loan or personal loan, you’ll choose a trusted source that works to responsible lending guidelines.
Compare Interest Rates
Finding the best deals on borrowing will depend on the type of loan you need, how much and how long you need to borrow. Interest rates can be confusing at the best of times, so if you are unsure if the loan quoted has a high interest or not, use a loan payment calculator to check. Most lenders will provide this on their website, so you can see at a glance how much the loan you want will approximately cost. It is worth remembering that the annual percentage rate (APR) shown is not always a true reflection of how much interest in total you will pay. If the loan you chose is for the short term, under 6 months, then many lenders will cap the total interest charged so that you do not pay more than 100% of the loan value. Compare different options and once you’ve found one you’re happy with the interest charge of, proceed.
Choose Flexible Repayments
Ideally, you’ll want a loan that provides flexibility, rather than being told by the lender what the loan term and repayments are. Look for lenders that provide the flexibility to choose how much you want to borrow, how long for and the frequency of repayment. Some may allow weekly, bi-monthly or monthly repayments to match up with your salary date, and many will allow you to choose a term from a range, such as 3 to 6 months. The idea is you can decide on an affordable repayment schedule for your circumstances, minimizing the risk of not maintaining repayments.
Look for any Fees
You may find lenders that charge hidden fees as part of the loan amount. You may also find those that charge a fee to apply, or a referral fee if they are a broker. It’s best to compare lenders that offer the amount you want against the fees they charge. There’s also admin fees and overdue payment charges that need to be considered too. Most will clearly state any fees they charge either on their website or on the credit agreement. Make sure that you carefully check terms and conditions and that you are happy with any applicable fees before proceeding with a loan. If you are fortunate enough, you may discover a lender that charges no fees at all, so keep this in mind.
Comparing finance products is the best way to ensure you get the best deal possible for your circumstances. If you have poor credit, for example, look for those that can help bad credit applicants. Once you have taken the time to compare, you should be able to apply with confidence.