Borrowing money can be a tricky task. If we choose a wrong method of borrowing money then it may lead to a bigger debt. The best way is to choose a credit provider or lending method that does not charge high interest. It is the interest which eventually inflates the payback amount. Therefore, one must smartly calculate the total repayment amount and check its feasibility. If it is not affordable in the long run then there is no point going for it. Find methods which are cheaper to borrow than others.
Choosing the lending method is based on the individual’s requirements and current financial status. So, compare loans by keeping your actual goal in mind. Why you are borrowing this money and how will you be able to repay? Get clear answers to these questions. Also, check your credit history and income to find which loan method is available for you. Choose the cheapest option of the lot.
The following are some of the cheapest ways to borrow money:
0% purchase credit cards: When you buy a 0% credit card then you do not have to pay interest on credit. This is time bound and so, for a particular period of time the creditor does not charge any interest from you. Once the time is over, you may be charged with standard APR. So, if you need to make good purchases then do that while you are in the interest free time. Spread the price of the purchase over the interest free period and payback the debt within the time limit. This is a good way to manage your purchases and credits.
Unsecured loans: These loans are offered to people with an excellent credit score. You can borrow any amount between £1000 and £35,000 for a time period of one to ten years. This method has the cheapest interest and is most suitable if you make repayments on time. In this case, you follow a method of fixed monthly repayments and so things can go as planned. If you are left with an outstanding balance at the end of ten years or whatever be the term period then you may face unfavourable interest rates.
Bank overdrafts: If you need a small amount of money for a short period of time then choosing an overdraft will work wonders. An authorised overdraft would not need you to pay interest on the amount borrowed. This is for a short period of time and if you cannot make repayments until the pre-decided time period then the bank charges heavy interest on their lending. It is more affordable then other methods like payday loans.
Loans from banks: Banks take good care of their loyal customers and offer them loans at cheaper interest when compared to other banks. So, contact your bank, which has your current or savings account. If you do not get a loan at a rate you expect then try to switch to other banks. You may leverage a low interest introductory offer from the bank you switch your account to.
Secured loans: For borrowing an amount ranging between £5000 and £7500, personal loan is the best method. It may just cost you 3.2% interest. When you want a bigger amount then choosing a secured loan option is a better idea. In this way, the bank gives loan amount against some security/asset like your home, car or savings. The amount will depend on the current value of the asset. This is a popular method amongst people who do not have a good credit rating. A word of caution here is that if you cannot repay the loan then the asset would be repossessed by the loan provider.
These are the cheapest ways to borrow money. You can find more on loans on freepricecompare.com. Feel free to call us on 02034757476.