ZOPA has been rated as one of the cheapest personal loans on the market right now, but there are warnings that borrowers don’t know how low the rates can be.
Research by the comparison website Compare the Market found that the average annual percentage rate on many personal loans, including the P2P lending giant, is around 2.9%.
However, a survey of more than 2,000 adults by Compare the Market found that a quarter think the average rate is between 11% and 50%.
The website suggested that borrowers may also confuse personal loans with payday loans, which often have a representative APR of 1,266%.
He said 20 percent think personal loans are too expensive to pay off.
Despite the competitive interest rates available, 58% admitted they had no idea their credit score and 82% said they had never researched how much they could borrow through an online checker before. apply for a personal loan.
“Personal loans are a great solution for many people, especially if you are looking to borrow a larger amount of money for a one-time purchase or project,” said John Crossley, Money Manager at Compare the Market. .
“For borrowers who want the discipline to make a fixed monthly repayment, personal loans may be preferable to a credit card where you have the flexibility to pay what you want each month, as long as it’s above the minimum payment. . In many cases, personal loans also have lower interest rates than credit cards.
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“When applying for credit, it’s important to take the time to understand the likelihood of you being accepted.
“Repeated credit checks can damage your credit score, but doing an online check will give you an idea of how much you can borrow responsibly without black-branding your name.
“Interest rates can vary widely from provider to provider, so it’s always a good idea to seek out the most competitive loan that offers the best deal.”
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