Some features of cheap loans are that these are available to those with lower credit scores, carry lower interest rates, require one-time arrangement fee payment, have a negotiable repayment time period, carry stricter repayment rules and increase the total loan cost. These loans can be obtained from small lenders, by offering collateral, by switching bank accounts and through credit and money transfer cards.
Thanks to the tough economic conditions existing in the present times, lenders find that loan markets have increasingly become competitive and to stay afloat in such rough economic waters are willing to lend at even low interest rates. Loans that are given to the needy at lower interest rates than usual comprise the cheap loans that make for a good away to find the financial means for a holiday or the purchase of a household good. These are particularly useful for those who have some credit blemishes due to which they cannot obtain regular loans. However, these loans have both, some favorable and unfavorable features. Here is a look at some of the features of these loans.
Features of a Cheap Loan
Beneficial features of these loans include that of being able to avail of one that needs repayment over a 5 or 10-year period. The rate of interest is not only lower, but is also fixed so that the repayment amount is known to you and is immune to market fluctuations. Also, in this case, arrangement fees need to be paid only at the beginning and not during the entire loan period that considerably reduces the total loan cost. Moreover, with a loan obtained at a lower interest rate you have the option to negotiate the repayment amount vis-à-vis the repayment time-span that can make the remittance more affordable and on-time. This in turn, will help you improve your credit score with which you can avail of regular loans.
Some unfavorable aspects of loans made available at cheaper interest rates that you should bear in mind are that they are usually accompanied by strict repayment rules that often come with penalties for late-payments. If you choose to offer collateral to get the loan and have faulted while repaying the same, you stand to lose the valuable asset. Also, as these loans are offered for longer repayment durations, the total loan cost increases.
How to Get A Cheap Loan
Despite these unfavorable parameters, cheaper loans are by far the only option for those with lower credit scores that can help them sail through their financial rough waters. Those needing a cheap loan can approach small lenders or mortgage a valuable asset that helps to reduce the interest rate and thus the total loan cost. They can also switch current bank accounts and use credit and money transfer cards to obtain the same.
However, if you are opting for a loan at lower interest rates, you should also remember to borrow only as much as you need and to balance out the repayment period with the amount. This will make the loan remittance process affordable and within the time-frame that works well to up credit scores. You should also check the APR, compute the total loan cost and compare the same between many lenders to avail of the cheapest loan.
While considering obtaining cheaper loans you must also be wary of lenders who offer payment breaks, holidays and cash-backs in the name of giving financial benefits. Although these offers are termed as benefits, in reality they only result in an increase in the loan term and the loan cost. It also pays to check with credit card reports, to read the loan terms and conditions and to check for any extraneous charges that up the loan cost while going in for a cheap loan.
Finally, the best way to get cheap loans is by making an extensive search, both online and offline. Through this you can land the best deal that can help you complete your purchase requirements at a cost that easily fits your pockets.