When you're weighing up different finance options to make a major purchase like a new car, or your dream holiday, you'll want to find the most affordable option for your budget and lifestyle. As a lower interest rate means smaller repayments, a low interest personal loan could be one of the cheapest financing options for you.
So that you're across all the info you'll need to consider when comparing loans and lenders, we've answered all the most common questions we are asked here at Mozo about cheap loans in one easy-to-read guide below, allowing you can make an informed personal loan choice.
What you can use a low interest personal loan for?
Have you been putting off upgrading the family car or making some much-needed
renovations to your home? Well, the good news is that a low interest personal loan could be that little extra help you need to make things happen.
Depending on the amount of money you need to borrow, and the time period you're prepared to pay it back in, a personal loan with a low interest rate could be a cheap option to fund many big expenses, including:
With an unsecured loan, generally, you won't need to provide the bank with proof of your purchase but you will need to prove that whatever amount you borrow, you will be able to pay it back.
If you're wondering how much this will be, head over to our loan repayments calculator to do some number crunching.
What types of low interest personal loans are available?
Before you settle on a low interest loan option that looks appealing, it's important to get to grips with some of the different types of loans that could be available to you:
- Secured: In essence, this is a loan for which you need to put up an asset as collateral. For instance, your car or home - giving the bank or lender some assurance that it will be able to recoup the money lent to you. Given that the lender has a lower level of risk, a secured loan will generally offer a cheaper interest rate compared to an unsecured loan.
- Unsecured: This is the opposite of a secured loan, meaning you won't need to put up anything against the loan as security. However, you'll still need to be able to prove you can meet the repayments - whether that's through providing payslips as proof of your income or having someone that is willing to be your guarantor. Unfortunately, the lack of collateral often means you will get a higher interest rate.