There are a lot of companies out there offering you the opportunity to get your hands on a 24 month loan – here’s how to compare what’s available and decide which one’s right for you.
There’s no shortage of companies offering 18 month loans and 2 year loans, but this doesn't mean you should pick the first one that pops up.
How much do you need to borrow?
To find the best 24 month loan, you need to decide how much you need to borrow before you even start looking at comparing or applying for one.
Whether the loan is to pay for something you’re planning to buy, or to cover an unexpected expense, try to work out precisely how much you want prior to making a 24 month loan comparison.
Sometimes it can be tempting to apply for more cash than you actually need, but don’t get carried away – you will have to pay back everything you borrow, and more on top of that.
How to compare 24 month loans
Once you know how much you want to borrow, you can start comparing the different loans on the market.
Check the application criteria
Each lender will have different conditions about who they will lend to and under what circumstances.
So if you know you’re likely to be refused by one – maybe because you’re not a certain age, don’t earn a specified amount or have a poor credit history – it’s best not to apply.
If you do approach a whole bunch of companies, it could well hurt your credit rating by making you appear desperate, so it’s best to hedge your bets and talk only to lenders who might actually be able to help you.
Minimum and maximum loan amounts
Lenders will offer varying amounts of money, which is why it’s important to have a figure in mind when looking for loans over 2 years, so that you know which ones you can rule out.
Some will let you borrow a minimum of £5,000, while others will set their maximum amount at £15,000, so which ones you can choose will depend largely on your circumstances.
Loan penalty fees and flexibility
Even for loans which you want to pay off over a certain amount of time, such as a 2 year loan, it’s worth checking whether the company you’re borrowing from will charge fees if you want to repay the whole amount early.
Some will charge a month or two’s interest if you want to pay it back more quickly, while others could be flexible and allow overpayments, so check the contract conditions carefully.
Choosing the best loan rate for your circumstances
While lenders will provide a ‘representative’ Annual Percentage Rate (APR) that may seem low, it doesn't mean that applies to all their 2 year loans – far from it.
For example, a company advertising a typical APR of 4.6% on a loan of £7,500 could charge a far higher one on any other amount – even if it’s for a £1,000 or £2,000 loan.
That’s why it’s recommended that you make a thorough 24 month loan comparison to see what each company is proposing before you apply to any.
Why it might be better to borrow with a credit card
If you’re looking to borrow over 18 or 24 months, you might be better off using a credit card with 0% on balance transfers or purchases instead.
These cards don’t add interest on top of the cash you've borrowed for a certain amount of time, so you can focus on paying off what you owe without having to pay extra.
If you’d rather sidestep paying the interest on a 2 year loan, these cards offer a good alternative, though you will have to pay a balance transfer or handling fee to shift your debt from another card.
Remember you will still need to meet the card provider’s conditions, so only apply if you have a good chance of being accepted and can pay off what you borrowed during the 0% period.
You can find out more about using cards in this way from out guide Should I get a credit card or loan?