Low interest rate loans can either be secured on your property, or unsecured, but they both tend to be available over periods of one to seven years - although some secured loans can be extended over a longer period.
The longer repayment period means lenders can offer significantly lower interest rates than those available on payday loans, and that whatever your timescale you should be able to find a low interest loan to meet your needs.
However, a number of factors beyond just your timescale will impact which loan is right for you.
So whether you're after low interest loans for bad credit, or want a loan to pay off debt, you'll need to consider:
Secured or unsecured?
To be offered a secured loan you'll need to own a property or - in some cases - a car, that you'll need to put forward as a guarantee you'll repay.
If you default on the loan, your lender is allowed to reclaim your home or vehicle and sell it in order to recoup their losses; this protection means they're often the lowest interest loans available.
Unsecured loans don't require that surety so they're more accessible, more flexible and you're better protected as you don't have to give anything other than your word that you'll repay.
However, because of this their interest rates can sometimes be more costly, and it can be especially hard to find low rate personal loans if you have an adverse credit history.
Whether you go for an unsecured or secured loan you'll generally come across fixed rate and variable rate options. If you choose a loan that offers variable interest rates you need to be aware that the rate and your repayments could increase or (potentially) decrease during the loan term.
Fixed rate loans guarantee the rate of interest throughout the loan period so you pay back the same amount every month, over the full loan term.
Find out more in our guide: Can You Get an Unsecured Loan with Bad Credit?
What size loan do you need?
Decide how much you need to borrow and compare it against each lender's minimum and maximum loan limits. Exclude any lenders where you're proposed loan would be ineligible.
Whilst it's never a good idea to take out a loan for more than you need, if you are on the threshold between two interest rate brackets, it may be worth opting for the slightly higher amount.
This may seem like a bad idea, but if you are teetering on the brink of two brackets, you could find yourself qualifying for lowest rate loans simply by opting for the higher of the two sums. The lowest loan interest rates are typically found for loans between £7,000 and £15,000.
Although it can be tempting to borrow more than you really need to so as to give yourself a little 'play money' it's generally best to keep this to the minimum.
You'll need to pay interest on anything you borrow so the bigger your loan the more money you'll need to find to cover the cost.
So make sure that you only borrow what you need to avoid paying hefty interest costs on money that you could do without.
How long will you need to pay it off?
Decide how long you want to take to pay off your loan and make sure any lender you consider getting a quote from can offer a loan to suit.
Remember to arrange your repayments over the shortest period you can afford so that you don't end up paying more for your borrowing than you really need to. It's a good idea to work out how much you can afford per month and on that basis work out how long you need to extend the loan over - just make sure that you'd be able to afford the monthly repayment.
What's the interest rate?
The interest rate you're offered will be based on your credit history, whether the loan is secured or unsecured, and its proposed size and duration.
If you ask for a loan within lenders' minimum and maximum limits, you're more likely to be offered their average loan interest rates (headline APR rates).
Getting the best low rate loan is fine if you've got a good credit history. On the other hand, if you're looking for low interest loans for bad credit it's worth searching for lenders that specialise in customers with adverse credit.
Make sure you'd be eligible for their headline rates and use those rates to assess which loans with low interest rate might work out cheapest.
The terms and conditions
Once you've established what size loan you need and which loans with low interest are likely to work out cheapest, check their terms, conditions and flexibility.
For example, what (if any) are the charges for paying off the loan early, or extending your loan facility? You should always make sure you're happy with the terms of a loan before you apply.
Never commit to loan without being sure that you are getting exactly what you need from it.
Remember, applications for loans will show on your credit history whether you take it out or not, so it's best to do your research before you enquire. Also check what other borrowing options you might have: read our guide, What's the Cheapest Way to Borrow Money? for ideas.
If you narrow your low interest loans comparison down step by step, you can find the best interest rates on loans from lenders that can also give you the service and the support that you need.
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