Guarantor Loans

How Much do Guarantor Loans Cost?

It is worth investigating loans before you get one and a very important question to ask yourself is how much the loan will cost. It can actually be more complicated to find the answer than you might think as well so it could take some work. A guarantor loan will be similar to other loans in how you will need to look at the costs and work out how much the cost will be for you.

Interest rate

The interest rate tends to be the think that we are encouraged to focus on when we re comparing loan rates. If you go to a comparison website this will be what they use to compare the costs of different loans. It can be useful but it is worth making sure that you do not completely rely on it. Firstly, it is worth noting that interest can be fixed or variable. If it is fixed it means that the rate will not change for the duration of the loan or that it will be fixed for a certain period of time, If it is variable it can be changed during the course of the loan and this will often happen in response to base rate changes, but may tend to go up when the rates go up but not go down when they go down, unless it is a tracker. The lender can choose when to change rates and by how much so they could change on a random basis as well. If you are comparing rates then you can only compare them at the point in time when you are looking at them as it is hard to predict whether they will change. However, you could get a fixed rate if you want to protect yourself against rate changes and short-term loans do tend to have a fixed rate of interest anyway.

Admin fees and charges

As well as interest loans may also have admin fees and other one-off charges. These are sometimes added in to the interest rate or charged separately so it can be a bit confusing. If you contact the lender and ask their customer services department, they should be able to clarify this for you and explain how all of the charges work. It is worth doing this as it can often be difficult to find on a website or within the terms and conditions of a loan. If these costs are included in the interest rate it will be called the AER (annual equivalent rate) but if they are not it will be the APR (annual percentage rate). It can be easier just to find out how much in monetary terms you will have to repay in full and compare those figures.

Late repayment fees

If you are late to repay your loan, then you will be likely to be charged for this. This charge covers the increased admin fees for the lender, the cost to them of borrowing that money for longer to lend to you and other costs as well. These fees can therefore be pretty high and therefore it is worth knowing how much they will be. It could be that you will be charged a one-off fee or a fee per day until you pay what is owed or are charged higher interest. This will all change depending on the specific loan that you choose. It is therefore well worth checking it out. You may feel that it will not be relevant to you as you will repay on time and hopefully you will be able to do this. However, there is always a chance that you may not be able to for some reason and just knowing how much it will cost might help you to be more motivated to make sure that you do repay it on time. You might also want to compare lenders, which are otherwise very similar on other fees to see whether the cost of late repayment might be a factor in you deciding whether you want to use them or not.

Early repayment fees

Sometimes lenders will charge extra if you decide to repay your loan early. This is not something that everyone would want to do, but sometimes it can be good if you have some extra money, to repay the loan and therefore save money on the interest. However, some lenders will charge you if you want to do this and if you feel that it is something that you might want to do, then it can be worth checking it out. Some fees may just be small and worth paying, some may not exist and some may be high so it is good to find out what the lenders you are considering charge, so that you can decide which will be the best for you to go with.

Comparison

How to Compare Short Term Loans

There are many different loans available and even if you have decided that there is a certain type of loan that you want, say short-term loans, then you will still have a choice of lenders. This will mean that you will be able to compare them and see which of the loans that you like the best. It can be hard to do this sometimes though, especially if you are not sure what you are looking for. It is therefore a good idea to think about what your priorities are with regards to borrowing and then you can choose the loan which fits in most with that. There are all sorts of things that you might find important but some of the main ones are below.

  • Cost – for many people the cost of a loan is the most important thing. They will have a limited budget and therefore want to make sure that they are not paying back more than necessary. Obviously, lenders will vary in how much they charge, this will be in three key areas. The interest rate, the fees and the late repayment charges. It is easy to just compare the interest rates and forget about the rest and so you need to be careful. If you are comparing percentages then use the AER which takes the fees everyone has to pay into consideration. Otherwise use the calculator on the site to work out exactly how much you will need to repay and then you will be able to compare these amounts. Finding out what the late repayment charges are could be trickier. You might feel confident that these will not be relevant to you anyway but it is worth being aware of how much they are. Not only might this help you to choose between lenders but it may motivate you to make sure you repay the loan completely as you will want to avoid paying them.
  • Value for money – many people think that value for money and cost are the same thing and it is important to not get confused between the two. Cost is simply how much something is but value for money refers to what you get in exchange for what you pay. For example, if two bags of crisps are the same price, you would not pick up a random one, you would look at the size, brand and flavour to decide which one you felt would give you the best value for money. You may even decide to buy a dearer one because those two are not a flavour that you like. The same applies for everything that you buy and you need to look at the different loans available and see whether there are some that stand out over others for reasons other than their cost.
  • Customer service – one thing that might be important to you is customer service. Lenders will have a customer service department where they deal with queries and you will probably want to make sure that you can get through easily using a means that appeals to you. This could be by email, phone, online message or whatever. Then you will want to get a fast response which is informative, helpful and accurate. To test this, you will need to get in touch and see how impressed you are with the response that you get.
  • Reputation – for some people it is the reputation of the lender that is important to them. They will want a lender that perhaps they have used before or at least heard of. Or perhaps they will be looking for one that is recommended by people that they know or comes up well in reviews. Think about whether this is something that is important to you and where you might find out the information that you need to judge them on this.

It might seem like a lot of work to do all of this background research. However, it can make a big difference to your borrowing experience. You could find that you will save money but also that you will get much better value for money if spend time to make sure that you pick the right lender. It need not take that long either, but can make a significant difference. If you want your experience of short-term loans to be a positive one then making sure that you pick the right loan to start with can make a really significant difference. Once you have done the research you will be able to use those skills for comparing all sorts of things and that will be very useful. It could mean that you could start to save money in all sorts if areas or feel that you are getting better value for money for lots of the things that you are buying.