Misleading APRs on personal loans impacts the financial well-being of the borrowers. They often end up paying more in loan repayments because they do not get the rate that is advertised. Some of them could be paying up to 2 and half times more than the advertised rate. So, how can you borrow well? What are the factors that you must consider while searching for a personal loan?
Representative Example: £12,000 over 66 months, 31.9% APR fixed. Monthly payment £358.22 Annual interest rate 28.01% fixed. Interest payable £11,642.52. Total repayable £23,642.52. Representative Example: £12,000 over 66 months, 31.9% APR fixed. Monthly payment £358.22 Annual interest rate 28.01% fixed. Interest payable £11,642.52. Total repayable £23,642.52. Representative Example: Loan Amount: £20950.00, Loan Term: 85 Months, Interest Rate: 23.00% PA Variable. Monthly Repayments: £537.44. Total Amount Repayable: £45,682.15. This example includes a Product Fee of £2,095.00 (10% of the loan amount) and a Lending Fee of £714.00 Representative Example: Loan Amount: £20950.00, Loan Term: 85 Months, Interest Rate: 23.00% PA Variable. Monthly Repayments: £537.44. Total Amount Repayable: £45,682.15. This example includes a Product Fee of £2,095.00 (10% of the loan amount) and a Lending Fee of £714.00 Representative Example: Borrowing £3000 over 36 months with a representative APR of 39.9% (variable),the amount payable would be £134.21 a month,with a total cost of credit of £1831.56 and a total amount payable of £4831.56. Representative Example: Borrowing £3000 over 36 months with a representative APR of 39.9% (variable),the amount payable would be £134.21 a month,with a total cost of credit of £1831.56 and a total amount payable of £4831.56.Maximise your options: Compare and apply for loans below with LoanTube
Apply Filters
Loan Amount
£4000 -
£20000
Norwich Trust
Loan Term
1 -
10 years
4.8/5
Representative APR
31.90%
Minimum Age
21 Years
4.8/5
Norwich Trust
Loan Amount
£4000 -
£20000
Loan Term
1 -
10 years
Representative APR
31.90%
Minimum Age
21 Years
Minimum Income
£2000 per month
Loan Amount
£5000 -
£100000
Evolution Money Loans
Loan Term
1 -
20 years
4.5/5
Representative APR
28.96%
Minimum Age
18 years
4.5/5
Evolution Money Loans
Loan Amount
£5000 -
£100000
Loan Term
1 -
20 years
Representative APR
28.96%
Minimum Age
18 years
Minimum Income
Not mentioned
Loan Amount
£1000 -
£10000
1Plus1 Guarantor Loans
Loan Term
1 -
5 years
4.4/5
Representative APR
39.90%
Minimum Age
18 years
4.4/5
1Plus1 Guarantor Loans
Loan Amount
£1000 -
£10000
Loan Term
1 -
5 years
Representative APR
39.90%
Minimum Age
18 years
Minimum Income
Not mentioned
According to a survey[1], 60% of the Brits are not aware of the interest rate at which they borrow a personal loan. This might be one of the major reasons for the rising level of debt in the UK. Borrowers are always known to suffer in the personal loan industry. We at LoanTube are trying to turn it around for the borrowers. To ensure that borrowers are not being exploited by astronomically high-interest rates, our platform allows real rate loan comparison. But how will it help you to borrow without paying more in interest? Let’s delve deeper and take a close look at it.
To help you understand the concept of real interest rate, we have divided this blog into different modules, which are:
- What is real interest rate?
- 5 ways in which LoanTube is different from others
- How to borrow well?
- Conclusion
What is Real Interest Rate?
In financial terms, the real interest rate takes inflation into its account. However, at LoanTube, by real interest rate, we mean the actual rate at which you will borrow money. Generally, when you apply for a personal loan, you get offers from lenders. The interest rates that they quote are proposed rates, which may change later after assessing your credit profile. But with LoanTube, our lenders will offer you “real interest rates”. They extend their quotes after assessing your profile, which minimises the chances of an increase in the rates. You can compare personal loan quotes from different lenders at “real interest rate”. That means the rate you see is the rate you will get.
Got confused? This example will steer away from your confusion:
Case 1
Suppose, you need a personal loan of £5000 for 2 years and you apply to 3 different lenders for this loan. Lender A is offering you this loan at an APR of 34%, while Lender B is offering the same loan at 31% APR, and Lender C is offering you the loan at an APR of 30.76%.
Lenders who are authorised by the FCA will perform a credit check on you to determine your affordability and creditworthiness. Lender A runs a check and he finds a few issues in your report due to which he has to increase the APR that he was offering you initially. He now offers you a personal loan of £5000 for 2 years at an APR of 40%. Similarly, Lender B and Lender C also increase the rate.
That means if you wish to consider any of these options, you will have to more than what you were shown in the first stage.
Case 2
You decide to go ahead with LoanTube for comparing unsecured personal loans at real interest rates. All the lenders will perform a soft credit check on you to determine the APR that you may get without hurting your credit score.
Lender A will offer you a loan at 35%, Lender B will offer you an APR of 32%, and Lender C will quote a loan at an APR of 32.3%. The APRs that you will see are approved in principle. That means you will not have to pay more than the APR that you have been shown by any of the lenders.
Therefore, you can choose a loan that costs you less in terms of interest rate easily with transparency.
5 Things that Make LoanTube Different from Other Loan Comparison Websites
LoanTube is a new-gen loan comparison website that considers the financial well-being of the borrowers. 58% of Britons spend time to find a good deal that favours them. To make things easier, and more transparent, we have designed a unique loan comparison platform.
#1 Real Interest Rates
Our lenders offer a quote for which you will be most likely accepted. When you apply for a loan through us, you will also see the “acceptance certainty” of all the lenders with details like:
- Monthly repayment amount
- APR
- Total amount repayable
- List of lenders who have declined your application
This makes the entire process of borrowing loans transparent and borrower-friendly.
Now, you must be wondering what is acceptance certainty? Acceptance certainty is expressed in percentage that shows the percentage of chances your application has for approval. That means, if you’re being showed 98% acceptance certainty, it means that there are 98% chances for its approval.
Every lender has their eligibility criteria according to which they make their decision. So, there are a variety of reasons due to which a lender may decline your loan application. Here are a few reasons for which your loan application may get declined:
- Poor credit score
- Incorrect information in the loan application provided by you
- Irregular income
- Mistakes on your credit report
- Too much debt that you haven’t repaid yet
#2 No Obligation
You’re under no obligation for accepting any of the offers that you may receive from our pool of lenders. Mostly, borrowers feel trapped when they do not get an option to switch from one loan provider to another. However, with LoanTube, there is no such obligation. You can change your mind according to your needs. We or any of our lenders will never force you to take a loan through us when you apply for a loan.
#3 Shopping Around Is Safe
You must have heard or read about the pros of shopping around for loan rates before getting one. Yes, there are a variety of advantages if you choose to explore the options available to you when you are searching for an unsecured personal loan. However, some of the lenders conduct a hard credit check on your profile to assess your creditworthiness.
Remember, that a hard credit check will knock off a few points from your score and will also leave a footprint on your report. All the lenders associated with LoanTube perform a soft credit check that will not impact your credit score. We are making shopping around for loans safer for your credit health.
#4 Single Application System
We don’t want you to tire yourself out while searching for loans. For every loan that you apply, you have to fill in an application form with all your details. This not only consumes a lot of your time, but it also impacts your score. With LoanTube, you can compare multiple lenders with a single application system. That means you will have to fill only 1 application form with us to receive quotes on personal loans from multiple lenders in the UK who are associated with us. Your credit score will also be protected as you do not have to apply for multiple loans.
#5 Transparent Lenders
LoanTube has been designed to address the needs and necessities of the borrowers. Hence, we have partnered with some of Britain’s reputed lenders who also share the same ideology. All our lenders are quite transparent on the terms and conditions at which they will offer you a loan. When you find a deal through us, be assured that there are no hidden terms. We like to make things clear to our borrowers to help them find a deal without any catch.
5 Questions you should ask yourself while borrowing an Unsecured Personal Loan
You play a critical role in shaping the unsecured lending industry. It is better to prepare a checklist of all the things that you may need to know before filling a loan application form. Before borrowing any unsecured personal loan, you must ask these 5 questions to borrow well.
1. How much the loan will cost me?
Some of the lenders do not provide the actual cost of borrowing. Before signing on the dotted line, know how much you will have to pay throughout the loan term. Knowing the cost of the loan will help you prepare a repayment plan.
2. What will be the impact on my credit score?
In the initial stage, a soft credit check will be performed on your credit report to understand your relationship with credit. However, before the final approval, the lender has to run a hard credit check on your report. This will certainly take a few points off your score. When you start repaying the loan on time and in full, your credit score will improve again.
3. Can I make early repayment?
You have to contact the lender and understand the Terms & Conditions of the lender in details. Read the fine print and ask your lender about early repayment. While some lenders may allow you to repay your loan early, while some may charge you an additional fee for it.
4. Is this loan affordable?
Responsible lenders always assess your affordability before giving their approval to a loan request. However, you need to assess your financial conditions and affordability. Calculate your monthly income and expenses to determine how much you can afford to repay each month.
5. When will I receive my funds?
Most of the lenders claim that by dealing with them you can get a personal loan on the same day. However, the actual time that it will take for the fund disbursement to your bank account also depends on your bank.
The Bottom Line
We believe in transparency and simplicity. Thus, we have designed a simple, yet easy platform where you can compare multiple offers for your financial need. Our state-of-the-art system provides results within a few seconds of application submission. We aim at making some radical changes in the way you borrow loans. Our real-rate loan comparison website is completely free for you to use. We do not charge anything to our customers for the service that we provide.
To start comparing personal loans with real interest rates, click here.
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Source: [1] Mintel Survey 2018
