If
you are looking for a low cost loan,
comparing the APR is a good place to
start as lenders do quote interest rates
in different ways. A fixed interest
rate will stay the same throughout the
term of the loan, regardless of any
changes in the bank base rate. This
means your monthly repayments should
always stay the same, allowing you to
budget accurately. A variable interest
rate may rise and fall in line with
any changes to the bank base rate. This
could result in your monthly repayments
changing during the term. In addition:
Although lowest APR is one factor that
contributes to a ‘cheap’
loan, you should always pay attention
to the small print as any additional
costs will be found there. Some lenders
do apply an early settlement charge
(also known as a redemption penalty)
if the debt is repaid in full before
the agreed end date. This can be up
to 2 months interest so it pays to check
this out before you commit. If you think
you'll clear the debt before the end
of the term then your best bet will
probably be a loan with no early settlement
costs, even if the APR is slightly higher.
