What is the cheapest form of personal lending?

November 3, 2019

When you need to borrow money it’s worthwhile shopping around for the cheapest form of personal lending, as the charges and interest applied to loans and credit varies considerably between providers.

If you’ve borrowed before and have a good history of repayment, you may be able to access some beneficial deals that considerably reduce your cost of borrowing. But what is typically the cheapest form of personal lending across the board?

There isn’t really one form of lending that’s always the cheapest – it depends on your individual needs and circumstances – but here are a few options that might be right for you.

0% interest credit card

Credit cards that offer 0% interest on purchases don’t cost you anything as long as you repay the full balance on time each month. It’s a good way to access borrowing, but if interest is applied to these deals the rates can be exorbitant so it’s crucial to keep up with repayments.

Zero interest deals can also be useful to purchase a larger item, and then pay it off in instalments, but again, you need to make sure you can stick to a clear plan that repays the debt before the deal ends.

Personal loans

Personal loans are unsecured loans taken out over a fixed period of time. One of the benefits of taking out a personal loan is that the interest rate is also fixed, and this allows you to budget effectively each month.

Unsecured loans are often used to purchase larger items such as a car or a special holiday. They commonly offer low interest rates, which make them a cheap method of borrowing, but you’re likely to need a good credit rating to meet lender criteria.

Bank overdraft

Bank overdrafts are designed for short-term borrowing of smaller amounts, and should be pre-arranged with your bank. They can be a cheap form of personal lending, but if you don’t adhere to the terms and conditions it can result in high charges and interest being applied to your debt. Whether or not a bank overdraft would be a cheap option for you depends on your particular bank and previous history of borrowing.

Northern Ireland Debt Solutions can offer further advice on cheap forms of personal lending, and will provide guidance tailored to your circumstances. Please contact one of our expert team – we offer free same-day meetings to quickly establish your best options.

Lawrence O'Hara

Insolvency Adviser

Tel: 028 2132 6269

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