Could Switching your Loan Provider Prove More Lucrative?

By: Reno Charlton

Many of us these days have personal unsecured loans, but for some of us keeping up with repayments can be very difficult due to the high rates of interest that we are paying. There is a common misconception amongst many borrowers that switching to another loan provider in order to get a better deal will result in having to pay a fortune in penalties to the existing provider, but this is not the case with unsecured loans.

Switching financial products and services has become a popular way for many of us to save money on our monthly outgoings, and with interest rates having fallen in December and set to fall further over the course of this year switching your unsecured loan to get a more competitive deal could be just the way to shave money off your repayments and interest.

In actual fact, most unsecured lenders do not impose any hefty penalty for switching to another provider part way through the loan. In fact, around twenty five percent of unsecured lenders do not charge any penalty at all for switching your unsecured loan to another provider, so many borrowers really do have nothing to lose by switching.

Around two thirds of lenders that offer unsecured loans do charge a small penalty of one month's interest for switching to another provider, but bearing in mind that this equates to under ?40 for an ?8000 loan this is really nothing to fret about if you feel that you can get a much better deal on another unsecured loan.

Economists and analysts are expecting another two interest rate cuts by the summer, and for those with expensive unsecured loans it is well worth keeping your eye on the interest rate movements on unsecured loans with other providers. If you do find a far more competitive offer then you could really benefit by checking with your existing provider with regards to any financial penalties imposed for closing down the loan.

Switching is easy and straightforward these days, so you won't have to go to any undue hassle to refinance your loan through another provider. However, you will need to be on the ball and keep up to speed with interest rates so that you can get the ball rolling right away if you do come across a tempting deal.

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