Why they might be the cheapest and fairest of the “Alternative Credit” products
When looking for a loan there can really be just one question; can I borrow from a mainstream lender (bank, building society or Hire Purchase specialist) at low, headline, rates of interest? If the answer is yes, then you don’t need alternative loan providers at all; they will be far more expensive and you should approach your bank.
If, however, you can’t borrow from this source then consider carefully where you might borrow those needed funds, your ability to make the repayments (affordability) and how spreading the loan over a period of smaller fixed payments might help your personal circumstances.
And then look at the real costs of borrowing.
Month 1 cost £16.60
Month 1 cost £40.00
Month 1 cost £165.50
Rent to Own Assets
Month 1 cost £22.50
(but based on OVER PRICED asset cost!!)
By looking at the table above you can see on a pure cost basis that a Guarantor loan is by far the cheapest of the 4 products compared.
You will also see that only the Guarantor loan and the Rent to Own product (which can only be used to acquire assets like TVs or Fridges from the Lender!) offer regular repayments that pay off the original loan and all interest.
But beware of Rent to Own offers, these often involve you committing to purchase overpriced assets with ADDITIONAL high interest costs. Always look at what the item might cost from an alternative seller, say Curry’s or Amazon, and how a Guarantor loan might be used to fund this lower cost purchase, further saving you money and reducing the loan repayments and period.
So, the only obvious downside to a Guarantor loan is that you need a Guarantor. Financially it makes sense to consider this option even where you may have to explain to a good friend or family member why you need the loan and why you need them to support you. It can also help you rebuild a poor credit rating, so if you have to take on a loan, this may easily be your best alternative.
www.lendfair.co.uk read the blog! See our FAQs