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How to play the loan market

March 29, 2015

banking

Unsecured loans – now is the time to consolidate

Since the turn of the year research shows that the average unsecured personal loan rates for all tiers have begun to fall to levels that haven’t been seen since 2011.

With Spring fast approaching, people tend to have a sort out around the house, maybe do a bit of decorating and plan out their finances for the rest of the year. We all need that holiday don’t we?

And with such low personal loan rates, now is the time to make those financial decisions, if you have debts on your current account, credit card or even another loan; then consider consolidating those debts into one monthly payment via a loan.

Over the past few weeks the big name providers such as Sainsbury’s Finance and Marks & Spencer have reduced their rates to provide the lowest APR for loans of £7,500 and above.

You can currently get a rate of 6.9 percent for any amount over £7,500 and with the expected base rate rise just around the corner; this rate shouldn’t be expected to be around for long.

So set yourself down in front of your PC, do your sums and work out how much you need to borrow to set yourself up for the rest of the year.

Borrow more to save money

Right then, you have done your sums and you need just under £7,000 to consolidate all your debts into one, your next step is to maybe go on to a price comparison site, and find out which loan is cheapest for that amount. And that would be the correct thing to do.

But wait there, think about it? Why have I only talked about tiers about £7,500?
Well that’s because this is where the competition is at; the top loan for amounts up to £7,499 is currently 8.4 per cent; that’s a huge 1.5 per cent difference for loans above £7,500.

A great example of this is Marks & Spencer; borrow £7,000 and the rate representative rate is 12.9 per cent equating to £3,384 in interest over five years, however borrow £7,500 and the rate is 6.9 per cent equating to £1,345 being paid back in interest over the same term plus don’t forget you would have the extra £500 too!

Know your market

Before you make any financial commitment make sure you have done your research, people like myself are always writing about the latest financial news, a quick 10 minute scan of the internet could end up saving you a small fortune.
Now maybe you can use that extra £500 to go towards that holiday!

Article written by Financial Ferret

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