QuidMarket are specialists in short term loans, which means that we don’t offer low interest loans, however, we believe that it is crucial for us to offer a wide scope of all the loan types that are available to you. If you are in the process of searching for the perfect loan, this type of information can help you to make an informed decision, factoring in your needs, budget and the loans available. On this page, we will cover low interest loans, what you should look for if you need low interest loans in the UK, and explain how our short term loans differ from them. Hopefully, we can help you to make an educated choice about whether low interest loans are the best option for you.
What Are Low Interest Loans?
Borrowing money from a direct lender usually comes at a cost. On top of paying the full amount that you have borrowed, you will typically pay interest, which is the lender’s charge for letting you use credit. If the interest rate is low, this means that you have secured a low interest loan, which could help you save money in the long run.
Usually, you will find loans with lowest interest rates from credit unions, which have a cap on the amount of interest that they can charge (3% a month or 42.6% APR). They operate with three main aims, which are to provide loans at low rates, encourage all members of the union to save regularly, and help members in need of financial advice. They act in their members’ best interests, so don’t let their members take out loans that they can’t afford.
When you are applying for low interest loans, you will be offered an interest rate that is calculated as a percentage of the amount you borrow. This is charged alongside your repayments each month and the longer you have a loan, the less interest you will usually pay, so you will typically see lower interest on long term loans or personal loans. The final interest figure may depend on a variety of factors, such as how much you borrow, how long you borrow for, the type of loan you choose, and your credit score.
Are Low APR Loans The Same As Low Interest Loans?
If you have seen an offer for low APR loans and have considered applying, it is worth knowing that these are different from low interest loans. While interest is usually a percentage of your borrowed amount that you pay as part of your monthly instalments, APR takes into account the total cost for the loan, including any compulsory fees that are automatically added to the loan. APR stands for annual percentage rate and could include interest and arrangement fees, for example. The reason that loan firms display APRs is to enable you to compare the cost of borrowing in a simple manner.
Reasons To Take Out Low Interest Loans In The UK
The longer you have your loan, the lower the interest typically tends to be, which means that long term loans are likely to offer lower interest rates. Low interest loans in the UK with longer terms can be used for a variety of reasons, such as covering large purchases like a wedding or a new car, or to pay off existing payday loans.
Low interest loans may also be attractive if you have an emergency expense to pay off, like car repairs or a broken down boiler, because of the lower repayment on emergency loans. However, it is worth remembering that the longer your loan term is, the more you are potentially paying back, which could mean that even with low interest, the final amount you pay might be more than you had originally intended.
If you are looking for low interest or low APR loans to cover non-emergency payments, such as a holiday or re-decorating your home, you should always consider other payment methods before borrowing. Think about whether the non-emergency payment is necessary and whether it can wait until you have the funds to pay for it without seeking a loan. If it isn’t essential at this time, it may not be worth taking out any low interest loans to cover it.
Can You Get Low Interest Loans In The UK With Bad Credit?
Typically, if you have less than perfect credit, it can be difficult to find low interest or low APR loans in the UK. Bad credit loans are usually based on affordability rather than your credit history like most other loans, so your monthly income and essential spending will be checked before a lending decision is made. However, when you have bad credit, lenders may consider you to be a high risk borrower, which means that they could think you are more likely to default on your loan than other lenders. This results in higher interest rates and spending more than you had intended.
Various lenders will have different criteria for borrowers to meet, so it is essential that you research before attempting to secure any low APR loans or low interest loans in the UK. If you have poor credit, lenders will see any marks on your credit rating and potentially offer you a loan with a higher APR, which could be a disadvantage to your credit score if you struggle with repayments. It is more important to ensure that you can afford monthly repayments before agreeing to low interest loans. If you have any doubt, it is better to seek support and consider other means of gaining funds.
Are There Alternatives To Low Interest Loans?
Low interest loans may sound like an appealing option, but they can leave you in further financial difficulties, especially if you miss repayments or end up paying more than you expected. They aren’t the best solutions for everyone’s needs, so there are a couple of different options that may be more appropriate, depending on your current finances.
Use your savings – if you have a considerable amount in savings accounts, it could be worth considering whether you have enough to cover the cost of the purchase that propelled you to search for low interest loans.
Borrow from family and friends – if you have the offer from friends or family to borrow money with no interest and no worries of ruining personal relationships, this can be a great choice that does not involve a third party lender. By reaching an agreement that suits both you and your friend or family member, you can avoid paying interest that could ultimately leave you in debt.
QuidMarket do not offer low interest or low APR loans in the UK, but do offer loan terms of 3-6 months and completely tailor the repayment plan to suit your budget or needs. Our loans are designed to help applicants cover any emergency situations or short term cash flow issues, so they should not be used for any long term financial issues. For more information, contact the experts at QuidMarket or for financial support, visit the Money Advice Service for free and impartial help.