How to calculate secured loan rates

Thanks to a recent review of the Consumer Credit Act; comparing secured loan rates is no longer the headache that it once was. The long-overdue governmental overhaul came into effect in January 2005 and stipulates that brokers must now advertise their typical APR; not just their best rates. This simple move has already had a beneficial impact on the loan industry and can be judged by the noticeable absence of TV and newspaper adverts promising unrealistic APRs on secured loans.

The legislation also specifies that loan offers must detail the total amount repayable, including all fees and charges, rather than just the monthly repayments. Responsible brokers will be able to give you a firm offer over the phone; providing all the information you supply them is correct. If your broker is unwilling to give you a comprehensive quote until they have received your documentation; it might be worth looking elsewhere. Remember that you are under no obligation throughout the loan process; regardless of whether you have signed any agreements.

Secured loan rates can be fixed or variable. Fixed rates tend to be reserved for customers with spotless credit profiles and are offered for a limited period of the loan term, for example: the first three to five years of the loan agreement. A variable APR means that the rate can go up or down over the lifespan of the loan. However, with a variable secured loan; the APR isn't linked to the Bank of England (as is the case with mortgages) and is unlikely to fluctuate significantly. Always remember that the shorter the term of the loan; the less you will pay overall in interest.

When searching for the lowest rates; it pays to be persistent. Get in touch with as many brokers as possible and consider consulting an Independent Financial Advisor if you still aren't having any luck.