Questions to ask a secured loan company

If you are taking out a secured loan, there are a number of factors that will influence the deal you get. To ensure that you get the right loan for your circumstances, these are the basic questions that you need to ask your secured loan company:

Are you a secured lender or a secured loan broker?
In most cases, a loan broker can in effect ‘broke’ the whole market place so that you will have access to more products and deals. A lender will typically only sell their own products, leaving you with fewer options.

You should also note that their fee structures may vary from loan companuy to secured loan company.

Are you linked to a specific secured lender?
If your secured loan broker is linked to a specific secured lender, then this means that they are tied to them and can only sell their products. This means that you are restricted as to the number of secured loan products available to you.

What is your typical APR?
When you see a secured loan advertised, you will see probably three figures such as “Loan rates from 6.9% APR to 19.9% APR - Typical APR 12.9%”.

The ‘typical’ APR (Annual Percentage Rate) is the rate that you are interested in. This is because while a company may offer loans from, as in our example, 6.9% APR to 19.9% APR, around two thirds of all borrowers will be offered a secured loan at the typical rate (12.9% APR).

The APR you are offered when you apply for a loan is based on your financial circumstances. So if you do not meet a lender’s criteria, you will be not be offered the lowest rate advertised.

What is your loan arrangement fee?
Many companies will charge you an arrangement fee for taking out a loan through them, selling it on the basis that they have arranged you a loan with a low interest rate. However, there are secured loans available where there is no arrangement fee and you still get to pay a low interest rate.

Please can I have a loan quotation and not a full loan application?
If you are shopping around for the best loan deal, it makes sense to get a few quotes so that you can compare interest rates and product features etc. You do not need to make a full application to get a quote and, in fact, it looks better on your credit file if you do not have lots of loan applications listed.

Make sure the lender or the broker knows that you want a quotation only.