How To Find The Right Credit and Loan For You

It’s always best to pay cash when purchasing big ticket items, which is why saving regularly is important but sometimes we don’t always have enough saved. Credit cards and loans are a way of borrowing money you don’t have, be it for a getting a new car, doing home improvements or enjoying a holiday. However, how do you go about finding the best credit or loan deal?

Determine what your needs are

Firstly, you’ll want to decide whether you need credit or a loan and this depends on your situation. Ask yourself how much exactly you need to borrow and how quickly you’ll be able to pay it off, as this will help determine the type of borrowing that is right for you. Generally credit cards are ideal for short-term balances that you can pay off each month. Loans, however, are better for medium to long-term debt where the amount being borrowed is over £7,500.

There are many forms of credit and loans available that cater to a borrower’s different needs, for example a balance transfer card, purchase card, car loan and personal loan. Determining what you need the credit or loan for will help to ensure you get the right one for you, otherwise it could cost you financially. You can find out more about the different types of credit and loans available in our guides.

Match it to your score and shop around

When you apply for any type of credit or loan, providers will check your credit score to assess your likelihood of paying back what you’ve borrowed. The higher your score, the less risky you’re considered to be. The best deals are only available to those with a good credit history and score so to get a good interest rate ensure you’ve done everything you can to improve your credit score.

If your score and history isn’t perfect but you need to apply for a loan or credit, then make sure you’re only applying for those that you will qualify for. Someone with a low score is unlikely to be accepted for the best credit card deal on the market and applying would only hurt their score further. Our cards and loans matcher tool can help you identify which deals you’re most likely to qualify for.

Our tool will show you the different deals on offer that are available to you, so ensure you shop around and consider all the terms and conditions before you commit. Ideally the lower the APR the better the deal, but don’t forgot the other fees and charges that are not included in the APR when comparing deals. This includes:

  • arrangement or balance transfer fee;
  • early repayment penalties; and
  • charges for late or missed payments.

Beware of the APR

One thing in particular you’ll need to bear in mind when picking a card or loan is the ‘representative APR’. This is the annual percentage rate that providers must display to give an indication of the cost of borrowing over a year. However, providers are only required to offer it to at least 51% of customers so you may be offered a different rate higher than the one stated.

Making sure you fully get to grips with the terms and conditions before you sign a credit agreement is vital, as not understanding the small print can lead to unexpected costs.