Here’s a funny little quirk that’s it’s worth looking out for when taking out a loan.
It sometimes pays to actually borrow more money, as you may find that it works out cheaper. MoneyFacts.co.uk has released some research that suggests that most lenders charge higher rates on small loans, and the interest rates are tiered depending on the amount you borrow.
The example cited is for taking out loans from one company; a loan of £4,999 had an APR interest rate of 14.9%, yet for a loan of £5,000 (yes, just one pound more), the company charges an interest rate of 7.9%.
If the loans were to be repayed over 3 years, for borrowing £4,999 you’d pay back £6,148, but had you borrowed just one pound more, you’d only have to pay back £5,609