How to get a loan with low APR
The business of providing loans is a competitive one and loan providers are therefore looking to attract customers with their best rates. But getting a low APR is influenced by:
Your credit record
To get a loan at the lowest APR, you’ll need a very good credit history. If your credit history is damaged or you haven’t borrowed before, you may find that you have to pay more.
You can check your credit score for free with the main credit reference agencies:
The amount you borrow
Generally, the more you borrow, the lower the rate you’ll see quoted. For example:
However, you should only borrow the amount you can afford to pay back.
The length of time you borrow for
Another way of lowering your payments is by extending the term of your loan. This will drive down your monthly repayments and mean you pay less over the course of the year. See the difference in monthly repayments in this example, but also the total cost of the loan.
||Cost of loan
Borrowing for longer means you end up paying out more in the long run, so be careful and don't be seduced by lower rates over a longer period. The golden rule of borrowing is to borrow as little as possible and pay it back as quickly as possible.
Even with a low APR, borrowing should always be carefully budgeted for. You don’t want to put yourself under unnecessary financial strain in the future.