Loans have become a common requirement today and many of us take different types of loans from various financial institutions to fulfill our financial requirements. While taking loans, one of the main considerations that a person has is the cost of loan. In common language, it is understood as the interest rate that is applied in the loan account. A person often makes comparison among the various lenders that provide similar type of loan product in order to get the loan from the lender that provides it at cheapest rate. Apart from the interest rate, various types of charges, fee etc is also applied, which are included in the cost of loan. The loan that is obtained at the lowest cost is called as cheap loan. It is always possible to get cheap loan whether it is a personal loan or any other secured loan.
Cheap loans are obtained after comparison of interest and other charges has been made with reference to different types of lenders. There are many sources for making such comparison. For example, there are many online sources, which we shall discuss later, that allow a person to compare person loans from more than 400 lenders and secured loans from more than 150 lenders. When loan is obtained by making such a comparison, no doubt, it would be cheap loan. A person should remember that for getting a cheap loan, there are many criteria apart from interest rate etc that have to be considered. These include risk price, repayment penalties, loan acceptance criteria etc.
If a person goes for a loan without considering above aspects, he cannot say with authority that he has obtained the cheapest loan. In other words, it cannot be said that the cheap loans are not always the best loans. Price for risk is one of the important features that have to be understood before taking a cheap loan. Every individual has different circumstances in which he applied for the loan and lender assess these circumstances for giving the loan. This is the reason why it is commonly observed that though a person makes an application for the loan against the advertisement appeared, he does not get the loan at the rate as given in the advertisement. Alternatively, it can be said that a person should get his loan requirements and interest rate assessed, after he has made the comparison among different lenders. APR is a term that denotes the percentage of total cost of loan, but some charges. Thus, APR should not be the only criteria for applying the loan. The other constituent of loan that is not included in APR etc is the early prepayment penalty. When a person repays the loan before the expiry of its term, he may be required to pay prepayment penalty. It is also called as early settlement fee or early redemption charge in some countries like United Kingdom. Sometime, this penalty is so huge that all the benefits availed by way of cheap APR are set off.
In United Kingdom, a person can also required to pay cost of payment protection insurance. This amount should also be added to the total cost of loan so as to find the cheap loans around. Generally, stand-alone policies are cheaper. It is important to note here that in UK, the person loans are covered under the consumer credit act, 1974. A person is required to sing PPI or payment protection insurance, so that in cases like person becoming sick or even if he dies, remaining amount of loan can be claimed from the insurance department. No doubt, it is good to sign such insurance clauses, but cover relating to such insurance is generally costly. It is also important to note here that in countries like United Kingdom, PPI is provided by many independent organizations and since the premium amounts differ, a person can go for shopping such insurance premium to get the best deal and for getting the cheap loans.
For getting cheap loan, one of the most important requirements is the credit profile of the person applying for the loan. Though, each lender has different way of scoring on the basis of credit history, generally persons with excellent credit scores are given cheap loans in an easy manner. Each lender vies its funds with respect to degree of risk attached and more the risk, higher the interest rate and dearer the loan.
Most of the lenders in United Kingdom are having "smart search" programs that allow him to find the credit profile of a person in no time.
There are many sources that can be contacted to get the cheap loans in easy manner. For example, in United Kingdom, a person can easily approach uswitch.com to find the cheap loan that fulfill all the requirements of a person. It is one of the important sources for getting cheapest person loans in UK and a person is required to provide information regarding the amount of loan he wishes to borrow, time required to pay the loan and if the borrower need any PPI. Without the information provided above, a person cannot expect to get the cheap loan in U.K. If a person is not having good credit score or having imperfect credit history, he may not get the cheap loan easily, as he does not meet the various risk related and other requirements of the borrower. If one lender is providing loan at higher interest rates, it is better to search for another lender. At uswitch.com, a person can go to person loan comparison service to compare the personal loans and when cheapest loan is found, the same can be applied online by way of online application.
Most of the sources that allow a person to make comparison and get cheap loan also provide loan calculator. This device helps a person in knowing the cost of loan with respect to interest rate etc. Uswitch.com is online, free and telephone based switching service that is provided all over United Kingdom for comparing loans provided by different lenders. The calculators provided at the web site allow a person to know about cheap loans by taking into consideration factors like location, payment method, price etc.
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