Although the credit crunch helped ruin most people’s ability to get a loan, it still may seem as if everyone is offering a loan if you read through the personal finance ads. This said, if you are shopping for a loan it is important to be savvy about how you start your search because taking a bit of extra time to find the best interest rate can end up saving you hundreds of pounds during the life of the loan.
Given the difference this can make in your ability to pay off a loan in a timely fashion a bit of investigation may be needed before signing any loan papers. First of all, you should be aware that you can borrow as much as £25,000 on a personal loan usually, but if you want the best interest rate you should try to keep the amount you borrow down to somewhere between £7,500 and £15,000.
Interestingly enough, interest rates tend to be higher on loans that are under £7,500 as well because lenders are attempting to still make a good profit off of the smaller loan purchases as well as the larger ones. Another common mistake is that people believe they have to go to a bank in order to get a loan, but in reality there are other options and the rates can vary widely depending on where you search.
Therefore, it is best to shop around a bit and try other banks outside of your personal bank to make sure that you are getting the best deal. Be careful when you apply for a loan however because an advertised rate only has to be allotted to 51% of borrowers so the interest rate you see advertised may not be the one that you are offered so always read the fine print and full terms and conditions before applying or signing into any loan agreement.