How do I work out how much a loan will cost?
When you’re considering a loan, it's important that you feel comfortable that you can make the repayments. Don't overstretch yourself and only borrow what you can afford to pay back comfortably.
Most providers have loan calculators, which will quickly and simply give an indication of how much loan payments could be for different amounts and over different time periods.
The rate shown on the calculator isn’t necessarily the rate you would be offered (the rate you get is often based on your credit rating). Some providers will give personalised quotes before you apply, so you know the rate you would get before you complete the application (and the credit search).
Always check this doesn’t affect your credit score before you get a quote – as too many searches can affect your ability to get credit and the rates you’re offered.
Generally speaking, loans between £7,500 and £15,000 work out cheapest in terms of the rate of interest charged, followed by loans between £15,000 and £25,000. Smaller loans of £1,000- £5,000 tend to have the highest interest charges.
However, it’s important you don’t borrow more than you need just to get a cheaper interest rate as this will cost you more in the long run.