Loans -
Defaqto: Be smart with personal loans - 10/01/2008
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Knowledge of interest rate 'tiers' is key to saving money on repaying personal loans, Defaqto said yesterday.
All loan providers offer such tiers - with interest rates varying depending on how much is taken out in the initial loan.
Generally, at some point between £1,000 and £5,000 being borrowed, the repayment interest rate is lowered.
Therefore, Defaqto said yesterday - savvy customers borrowing just within the higher tier are required to repay far less than those borrowing just a few pounds fewer.
Principal Consultant of Banking at the firm David Black commented: "Borrowers should take care when choosing the size of loan they want, as a little effort in researching the interest rates charged on different tier levels could save them a considerable amount of money."
As an example example, both Lombard Direct and Direct Line charge 15.9 per cent APR for a £4,999 personal loan.
However, taking out a loan for £5,000 results in a repayment rate of 7.9 per cent and 8.4 per cent respectively - as it is being charged from a different tier.
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