Everyone remembers the fiasco of payment protection insurance. Falsehoods, utter lies and misleading campaigns have put many companies in the dock. Innumerable people who indulged in false advertising, misleading and pushy sales no longer have a career in the finance industry. While the fiasco may be a thing of the past, misleading campaigns still exist, in myriad forms.
When you check out some smart loans in UK, you will come across ridiculously high rates of interest and surprisingly low rates. Both are extremes that you should try to stay away from. But at the heart of it you should understand that unsecured short term loans cannot and don’t have lower interests than what secured loans charge.
Some payday lenders and private companies offering short term loans in UK are claiming that you would get a rate that is almost as traditional personal loans from banks. The latter is secured and the payday loans are not. Short term loans without collateral are riskier for lenders. Many lenders don’t even factor in credit history while approving or rejecting. It is almost impractical to expect that such unsecured short term loans will have interests similar or lower than secured loans.
There could be some private lenders offering great rates of interest to borrowers who have developed an association over time. There are instances when private lenders will slash the rate of interest knowing well that the borrower will pay on time. But if you don’t have such an association, there is really no reason why you would be offered an interest rate lower than what banks charge.
There is a marked disassociation between rates of interest for secured and unsecured loans. However, you should stay updated with the former to get an idea of fairness of the latter. If the banks are charging less than ten, then private lenders should not charge close to thirty or more.