If you took a personal cheapest loans in the UK for € 4,500, you would expect that the interest you pay to be back ...
a) less than if you borrowed £ 5,000?
b) the same as if you borrowed £ 5,000?
c) more than if you borrowed £ 5,000?
You may be surprised to learn that it is the right answer c.
You would think that for the borrowing, if you have less money, you'd be forgiven for paying a lower interest rate, but more often than not is not the case. This explains how and why cheapest loans in the UK interest rates are established by the amount you want to borrow affected.
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The impact of the loan amount on cheapest loans in the UK
While most of us have an idea that the amount you want to borrow, an influence will pay on the interest rate, the ins and outs of the loan interest may come as a surprise.
As in the example above, if you borrow £ 4.500 when we have our test , the best on the market was at 12.9% - which means you would pay back £ 1,533 in interest over a 5-year-old office wanted.
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However, if you borrow instead of £ 5,000, you could use an APR of 8.8%, so you pay back £ 1,150 in interest on the same concept had. To stop paying back £ 383 more in interest for borrowing £ 500 less.
Why pay a higher effective interest rate on a smaller loan
Why? It is not always clear, but in general, the annual percentage rate that a lender sets a credit is an indication of the risk of the company regards it as the taking and the likelihood they believe they would get their money back. It could be that the need for loan companies, small amounts as an indication that the borrower has no savings to fall back on cheapest loans in the UK to see, and therefore less responsible with their personal finances.
If you think about the wider market borrowing, it starts to add to - think about mortgages, which typically have a high loan amount and lower interest rates, while at the other end of the scale, payday loans are usually for very small amounts, but have huge APRS .
How to get a better cheapest loans rate in the UK
If you are looking for a cheapest loans in the UK, check what APR is available for a few different loan amounts. You might find that the inclusion of further, you can reduce the amount you pay back interest. If you are concerned about the temptation of borrowing more money than you really need, you could put the extra money in a savings account or, if there is no penalty to pay the excess back straight away.
Alternatively, borrow, if you are looking for a small amount of money, read our article on small loans to read more and see what options are open to you
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