How to get the best bank loan rates

Bank loan rates fluctuate because of the bank's current financial position and the deals that their competitors are offering in the marketplace. But if you see a good deal you may not be able to take advantage of it, unless your income and credit history are within the parameters the bank has set.

Maximising your credit rating

In order to qualify for some of the bank's best loan rates you will need a good credit rating. If you have always paid your credit to terms and never taken out an IVA or been made bankrupt, you will probably have a good credit rating. But before applying for a loan, it pays to check where you stand with a credit agency like Experian.

Best loan rates

Nowadays the best place to find the lowest interest rates is a comparison website. Places like moneysupermarket.com or comparethemarket.com will list the latest offers and make the choice easier for you by showing factors like the total payable amount for the loan, the monthly repayment amount and the date at which the current interest rate ends.

Types of loans

Loan rates also differ depending on the type of loan. A car loan secured against the vehicle you're purchasing could be available even if your credit rating would not allow you to take out the equivalent unsecured loan. Similarly, a bad credit loan will be available to a wide selection of the population even if it's unsecured, but the interest rate will be high as the risk for the lender will also be high.

Final word

As bank loan rates fluctuate you will have to do some research before taking one out, but only take one if you are in need of a significant sum. If you are borrowing under £1,000 and want to pay it back over a year of less, you may find that a credit card could work out cheaper. Taking a new credit card with 0% interest for the first year or transferring your balance to a card that's offering 0% for one year, would work out cheaper.

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