‘Cheap’ can mean different things to different people. The concept of ‘cheap loans’ relates to the cost of borrowing compared to other loans of a similar type. Special features of a loan product may make it more expensive in general, so you’ll be looking for the cheapest loans available that still offer the service that you need.
If you are looking for ‘cheap loans’, you might also like to ask ‘which loan can I afford?’. With all loans, either short term loans or loans over a longer period of time, you have to pay interest on the amount you borrow, and it’s the varying interest rates that will make the biggest difference to the repayment amount between the cheapest lenders.
However, with cheap loans in mind, there are other things to consider as well, such as:
Application fees are not too common, however when you verify your payment card as part of the application process, your card issuer may need to reserve a small amount, usually no more than £1, from your account. This will be released to you later, but if you have less than £1 in your bank account at the time of your application, it may cause a problem.
With most high cost short term credit (including payday loans), late payment fees are fairly common. The FCA has capped late payment fees at £15, although some companies charge less. Missing payments can turn even cheap loans into expensive loans pretty quickly, so you should not apply for a loan if you know you cannot afford to repay the full amount by your repayment date.
Why not read our blog for tips on how to budget and save money, whether you end up taking out a loan or not, such as our Tasty Ideas for Leftover Food.
The accessibility of a loan is something you may need to consider and may depend on when you need the loan and what your credit history is like. If you need cash quickly, payday loans might be what you’re looking for as the money is often transferred within fifteen minutes of your application being approved. Payday loans, although not generally synonymous with ‘cheap loans’, could be an option for people with a poor credit history as some banks might not lend to someone if their credit history has negative marks on it. However, if you need to borrow a large sum of money, and you’re interested in the cheapest lenders, you might want to check the rate of different providers, such as your bank.
While some banks have a lower APR (annual percentage rate), and therefore at first seem cheaper, you should never borrow more than you need – so if you only need a few hundred quid, then a bank loan may not be the best option as you may end up paying more in interest than your total repayment for a short term loan.
At Clear and Fair, we compare loans from £100 to £1000. Read more about our lenders here.
Payday loans aren't typically considered cheap loans because of the high APR. However, if you’re only borrowing over a very short period of time, the cost of a payday loan may be affordable. Using a loan comparison site, like Clear and Fair, is a great way to compare the most affordable loans for your needs.
Using Clear and Fair is, as the name suggests, clear and fair! We want to help you compare the cheapest loan providers for your needs. Just select how much you want to borrow and for how long and voila; an unbiased list of loans from lowest to highest in price. Using our Clear and Fair comparison site is free, and we aren’t paid to promote certain lenders above others so the first option that appears really is the cheapest loan.
For whatever reason you need a loan, always do your research. Work out your finances for the coming month so you know exactly how much you need to borrow – and how much you can afford to pay back. Late payments can cause you serious money problems, so it’s important that you consider the cost of any loans that you are thinking of applying for.