© Bram J. Meijer money
© Bram J. Meijer
How to get a low rate loan
Pre-approved offers
Loyal customers with an excellent credit history may already have been pre-approved for a low rate loan. Log in to your internet banking, select pre-approved offers and see whether you’ve been selected.
Compare the market
In order to get the best loan rate, you need to compare the cost of borrowing money using a price comparison site, such as Moneysupermarket.com or Comparethemarket.com. You’ll be able to view a variety of loan rates based on your credit profile.
Loan size
You’ll pay a lower APR if you borrow more than £7,000. Smaller loans normally are attract a higher rate of interest because there’s less scope for profit potential.
Payment protection insurance (PPI)
Although PPI covers you against illness, accident and redundancy, it will dramatically increase the cost of borrowing. It’s been a huge cash cow for the banks. However, they are currently dealing with a number of claims with regard to mis-selling.
Cosigner
If you have a poor credit history, you will find it difficult to borrow money, let alone qualify for the best loan deals. A cosigner with good credit will help you to get approval for affordable credit.
Ways to improve your credit rating
Number of applications
Don’t make multiple applications for credit in a short time frame. Read through the information on the type of customer that your bank is likely to be approve and only apply if you’re likely to qualify. Too many credit searches are detrimental to your credit.
Pay down debt
Lenders look closely at how much credit you have. So, use your savings to pay down personal debt. The closer you are to your maximum credit limit, the less likely you are to be approved for cheap loan rates.
Pay punctually
Missed and late payments are very detrimental to your creditworthiness. Always pay your debts in full and on time.
Management of revolving debt
Spread your debt across several credit cards and avoid using more than 30% of your credit limit on one card in that month.
Use obsolete cards
If you have a credit or store card that hasn’t been used in quite a while, use it to make a few purchases. Closing down old cards will hurt your credit rating because it has negative implications for your credit utilisation figures.