Does a low interest loan mean a low interest rate?
13 June 2008
You may think that a low interest loan necessarily means you need a low interest rate, but it depends on other factors, too. Choosing a low interest loan also involves finding a loan with term lengths that suit your budget.
Different loan types will usually offer varying minimum and maximum terms, but if the minimum is longer than the shortest time you can repay the loan in, you could find that a low interest rate is meaningless. If you need to keep a loan for a year longer than necessary, you will likely pay more in fees and interest than a loan with higher interest rates, but more suitable term lengths.
You can also occasionally augment your low interest loan by finding a loan with an option for a redraw facility or offset account. This allows you to put all of your funds into paying off your loan for the longest period of time, as you can make purchases with a credit card and pay the card off in full before the interest free period on purchases expires. As interest is usually calculated daily, over time this will usually mean you have a very effective low interest loan set up.
Please visit our comparison page if you would like to browse through a selection of personal loans and possibly find yourself a low interest loan.
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