Interest rates and charges are a tricky subject, no more are the days when lenders came to the market with just one rate. These days’ lenders will normally offer rates that match the status of the applicant. This means that lenders will take the data provided on application forms, compare it to credit reference agencies and use it to determine if a loan can be given, then calculate the charges for that loan.
In some ways this is better than it used to be because those borrowers who represent a lesser danger of not being able to make repayments. It means that more responsible borrowers are not paying more to cover those who have shown a constant history of failing to make repayments through choice.
Each lender that we work with will have their own individual rates and risk levels. The lenders will have spent a lot of money determining what these rates are for each type of customer, it’s a very well kept secret and they don’t tend to make them public. When we submit your application to lenders, we will only be able to pass on whether or not that application has been accepted and if so at what rate.
If you find the offered rate acceptable, then you would click proceed and complete the process to get your money. If you do not find that rate acceptable or affordable, then you can simply close your internet browser and that will be the end of it.
Of course, normally the cheapest way to borrow money is through a bank. Unfortunately since the downturn of 2008, banks have become more difficult to obtain credit from (none of the lenders on this site are banks). This leaves those who can’t get credit from mainstream lenders needing to find alternative sources.
“Alternative sources” is usually a term given to those who charge higher interest rates. There are now caps on certain loan types, such as those for less than 12 months. There is an ongoing debate on whether or not this makes it cheaper for most people, or just harder for most to be accepted.
What most people will now find though is that interest rates on the web, bare little resemblance to the base rate of interest listed by the Bank of England.