Low Interest Loan

Rates, damned rates and statistics!

There's no real definition of a low interest loan; because so many other factors: intervene: perhaps convenient repayments or a repayment holiday, or benefits in kind. Either way, for a low interest rate, look at the APR, and be sure to add on any payment protection insurance for a true assessment of the cost.

In an ideal world, loans would be clear cut- the one with the lowest quoted rate would be the one to go for. But we don't live in an ideal world. For starters, the lowest quoted rate might be introductory- what matters is the APR (Annual Percentage Rate, usually in brackets), which is a rate including all charges you might have to pay across the entire term of the loan. It's the best judge of whether a loan can really be called a low interest loan.

Then, don't forget to bolt on a premium insurance package if you're borrowing for any length of time, or if you have any reason to be worried about your future ability to pay. And let's remember the fact that the interest rate quoted on-site isn't necessarily the one you'll be offered. The process of credit scoring means that as an individual (especially with banks- the supermarkets are less cagey) you will be offered a rate matched to your circumstances- and that rate may be a good bit higher than the "best" rate shown in promotional literature. So what looks like a low interest loan when quoted in the literature might be beatable.

So now you have a whole raft of reasons to not trust the numbers, and to shop around. There are low interest loan products; and there are deals on offer that beat other deals- but you will have to put some effort in- and don't be afraid to apply for loans and then not sign the papers; that's often the best way to find the exact figure you're expected to pay.