If like me you prefer to spread the cost of  purchases such as a car, house or holiday over a period of time it can be worth checking out the thousands of loan, credit card and cash advance options available on the market today. If you were to plot a graph of interest rate history you would find that money is cheaper in real terms now than at virtually any other time. Articles on interest rates discuss complex world economic issues, but to you and I the most important question to ask is " how much will it cost me to borrow?"  In simple terms the cost is expressed as an Annual Percentage  Rate or A.P.R. This basic indicator tells us what percentage of the loan we have to pay per year to the bank in addition to the money we borrow. 

There are currently many credit card companies offering a fixed rate 0% APR introductory offer to encourage you to use their loan facilities. These 0 % deals are a great way to finance a project, investment or purchase if they are used sensibly. The offers generally run for 3 to 9 months during which time you only pay back the money you borrowed without any additional interest. The credit cards often come with a balance transfer option or cheque book which means you can take full advantage of the offer period. The interest free loan will probably only apply to the balance transfer portion of any spending on the account, you will pay a different APR on any purchases you make with the card. The payments to the Credit Card company will be structured to pay off the interest free element of the loan before you pay off interest bearing debt on the account. The smart way to use these offers is to transfer all your debt onto an interest free card for the offer period and mark on a calendar or in your diary 6 weeks before the offer ends to apply for another account with a different lender. This will give you time to receive your new card and transfer any outstanding debt onto the new card before you have to start paying interest.

If you have defaulted on any loan advances you may considered a bad credit risk or have a low credit score. Bad credit personal loans are generally sold at a higher rate of interest. If you have been denied credit in the past it can prove difficult to get a competitive loan from the big lenders. Don't be tempted to seek out a loan shark, these people will lend you the money but at huge interest rates which means you pay back far more in interest than a conventional loan. The best way to deal with a bad credit rating is to first establish what your credit score is. A simple way to establish your credit position is to use a company such as Equifax or Experian who record information on your credit background. Once you know your score you can work to repair your credit details by either employing an agent or tackling the task yourself. Look carefully at companies who claim to erase bad credit or offer bad credit personal loans.

Debt consolidation can be an attractive option but remember to look at the total cost of repayment over the term of the loan. The interest rates are often lower than high street retailer cards so it can make sense to terminate your agreement with a number of high interest bearing accounts and apply for a low rate or fixed rate loan over an agreed period. A fixed rate loan can be a smart move in an economic climate where interest rates are likely to rise over the term of the loan or mortgage. You agree to fix the rate at a certain percentage so if the base rate or prime interest rate rises, your mortgage or loan payments will remain constant and you can budget your spending accordingly. use a loan calculator or mortgage calculator offered from an independent source to calculate your repayments.

 Home mortgage refinancing can also improve your cash flow. Your mortgage may have been agreed some time ago and may not  now be offering the best deal for you. It is worth checking the interest rate you are paying on a regular basis to ensure your mortgage lender is offering a competitive package. Remember that some companies require that you stay with them for a fixed period which may be from 12 months to 4 years and will charge a redemption fee when you transfer your mortgage away to another lender. There are many companies and brokers in the market so competition for your business is fierce which means you can often negotiate an excellent deal if you are in  good financial health. Check out the links on this page to seek out some the best deals around.



This page is based on observation and does not constitute financial advice.

 Always use an independent financial advisor if you require unbiased advice