Category: Advice

Is Interest Rate the Best Way to Choose Between Loans?

There are many loans on the market and it can be hard to know which one will be the best for you. Many people use interest rates as a way of comparing them, as do most comparison websites. However, there are other differences between loans and lenders which should also be considered when you are thinking about which one to choose.

If cost is a very important factor when choosing a loan, which it is to most people, then you need to look at the other loan costs as well as the interest rates. There could be costs for setting up the loan, which should be considered as some can be a lot more than others. There may also be other charges if you do not repay on time, want to skip a payment or repay the loan early. It is good to have a look at what these charges are by looking at the terms and conditions. You may not think that they will apply to you, but it is still worth checking to see whether they are unrealistically high. If you are picking between loans with the same interest rate then these things could be the best way to pick between them if cost is the main factor for you.

It is also worth considering other factors as well though which might have an influence on which loan is the best. It could be worth starting by looking at reviews of that loan and the lender to see what other people think of them. There may be comments and complaints which you could find will make you feel that you do or do not want to take out such a loan. These could vary a lot, but it is worth bearing in mind that people tend to complain more than they praise so you are more likely to see negative comments rather than positive ones.

You may be interested in the reputation of the lender to see whether you think that they will value your custom and respect you as a customer. Some of this information may be able to be gained from looking at reviews, but it can also be useful to look at their website. This should give you a feel as to what they are like and how they feel. It can also be really useful to contact their customer services and speak to them. Ask some questions about what they can offer you and things like that and you will get an idea of how helpful they are as well as how polite and this could give you a good impression of how customers might be treated. It can also be useful to speak to friends and family about which lenders they have used in the past as well as currently and see whether they have had any positive or negative experiences that they want to share with you.

You may want to have a branch near to you so that you can make your payments or go in and see someone if you have any problems and discuss things face to face. Some people will be happy to deal with their lender online or over the telephone but there will be others that would rather not do things this way. Consider what type of person you are and how you would like to deal with your lender.

You may be concerned about what might happen if you struggle to make repayments. You may feel that you want a lender that will be flexible or even a product that will allow you to have payment holidays with no consequences. You may be able to find products and lenders like this but they could be more expensive than those that do not and you will have to decide whether you think that it is worth paying the extra money for this service.
So, interest rate is very important when choosing a loan as it tends to determine the overall cost. However, there are other actors that you should consider alongside it when you are making your decision so that you make sure that you have the very best loan for you. Some might be very similar price wise and so it is these other factors that could make a difference and help you to make your decision.