Are you considering taking out a personal loan? Before you do, consider that there could be a better way to borrow the money without paying any interest at all.
That’s right - you could get yourself a totally 100% interest-free loan.
The cheapest personal loans around offer to lend money at around 6-7%. But many lenders only offer their ’typical’ rates to customers wishing to borrow more than £7,000. That way a lender can ensure that their product gets into best buy tables while maximising their profits from people who just want to borrow a few thousand pounds.
The best lenders around will offer their advertised ’typical’ rates to customers borrowing less than £7,000, but they may also require you to have a better credit rating before they approve the loan. Probably the best personal loans around at the moment are the Northern Rock personal loan, currently lending at 7.4% and The Moneyback Bank personal loan lending at 6.3%.
Use a credit card not a loan
If you are after a short-term cash injection to pay for a big purchase or settle some small-ish but expensive debts then consider taking out one or even two 0% credit card offers. The best credit card deals on the market today will lend you money on a balance transfer for 15 months at 0% and for new purchases for 12 months at 0%.
If you already have debts racking up, say, on a store card which are costing you 29.9% APR interest or on a standard credit card which is costing you 16.9% APR then transferring your balance to one of the new 0% offers makes seriously good financial sense.
See the table below to see just how much you could save by transferring expensive store or credit card balances to one or more 0% balance transfer credit card offers.
