What Makes for a Great Personal Loan Deal?

By Michael Strauss

There are dozens upon dozens of loan of loan providers in the UK, each with several different loan packages available. With all this choice, what should you be looking for to get a good loan deal?

Low Typical APR

The APR figure gives you a simple way to compare the cost of different loans. In theory, the lower the Apr, the less your loan will cost you overall. In reality, different lenders can use slightly different systems to calculate their APR figures, and so they shouldn't be taken as cast iron guarantees that one loan is cheaper than another. In general terms though, the lower the APR, the better.

No Arrangement Fees

If your loan lender mentions an arrangement fee which you need to pay in order to have the loan paid out, then look elsewhere. While such fees are common for mortgages, poor credit loans and some secured loans, you shouldn't have to cough up an arrangement fee for a general purpose personal loan.

No Hidden Fees

Also make sure that you're not going to be hit with any hidden fees. A common example of this is paying 30-50 to have your loan cheque delivered by courier, or having a same-day transfer of the loan into your account. Unless you're in a real dash for cash, decline the option and avoid the charge.

No Need to be an Existing Customer

Some banks make eye-catching offers which propel them to the top of the best buy tables, but on closer inspection these deals are only available to existing customers - meaning that you need to take out another product such as a current account or credit card in order to get the loan. This is probably more trouble than it's worth and unlikely to give you the best value across all the products you sign up to.

Easy to Apply Online

Finally, you should be able to complete the application process online, and receive a quick decision. The need to sign the credit agreement will mean there's always going to be some delay involved, but you shouldn't be kept hanging around waiting for a decision, or have to spend time on the telephone giving extra details to those you supplied during the application.