If you are taking out a loan, there are a number of factors that will influence the deal you get. To ensure that you get the right loan for your circumstances, these are the basic questions that you need to ask your loan company:
Make sure the lender or the broker knows that you want a quotation only.
Are you a lender or a loan broker?
In most cases, a loan broker can in effect ‘broke’ the whole market place so that you will have access to more products and deals. A lender will typically only sell their own products, leaving you with fewer options. You should also note that their fee structures may vary.
Are you linked to a specific lender?
If your loan broker is linked to a specific lender, then this means that they are tied to them and can only sell their products. This means that you are restricted as to the number of products available to you.
What is your typical APR?
When you see a loan advertised, you will see probably three figures such as “Loan rates from 6.9% APR to 19.9% APR – Typical APR 12.9%”.
The ‘typical’ APR (Annual Percentage Rate) is the rate that you are interested in. This is because while a company may offer loans from, as in our example, 6.9% APR to 19.9% APR, around two thirds of all borrowers will be offered a loan at the typical rate (12.9% APR).
The APR you are offered when you apply for a loan is based on your financial circumstances. So if you do not meet a lender’s criteria, you will be not be offered the lowest rate advertised.
What is your arrangement fee?
Many companies will charge you an arrangement fee for taking out a loan through them, selling it on the basis that they have arranged you a loan with a low interest rate. However, there are loans available where there is no arrangement fee and you still get to pay a low interest rate.
Please can I have a quotation and not a full application? If you are shopping around for the best loan deal, it makes sense to get a few quotes so that you can compare interest rates and product features etc. You do not need to make a full application to get a quote and, in fact, it looks better on your credit file if you do not have lots of loan applications listed.