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What is the cheapest way to borrow money?

From credit cards to loans, there are so many ways to borrow money, but the question is, which method is the cheapest? Whether the borrowing route you choose is cheap or not is largely down to the amount of money you need.

We’ve broken down a selection of lending options to help you make a decision that’s suited to your circumstances.

0% interest credit card

One of the cheapest ways to borrow money is to take out a 0% interest credit card. This means you won’t pay any interest for a certain period, however, the amount you’re allowed to borrow tends to be less than other sources of lending such as a loan.

It’s important to remember that 0% interest credit cards don’t tend to be interest free forever – interest-free rates are usually a perk offered during the introductory period. They can rise after a set amount of time. When taking out a 0% interest credit card, be sure to consider the APR rate after the time is up.

Unsecured loan

An unsecured loan, otherwise known as a personal loan is a cheap way to borrow money. Unsecured loans tend to have the lowest interest rates out of all the lending options available, apart from mortgages which aren’t really designed to borrow money unless you’re re-mortgaging your house.

You’ll usually need to have a good credit score to access unsecured loans with cheap rates. Loan repayment terms may also be stricter compared to other forms of borrowing

Secured loan

A secured loan could be used to borrow large sums of money for a low cost. However, if you have a low credit rating your options may be limited. As secured loans are secured against valuable possessions such as your house, there’s a risk you could lose your possession(s) if you are unable to meet the repayment terms.

If you are thinking about taking out this kind of loan, you must be confident you can pay it all back as the consequences can be damaging.

Bank overdraft

If you only need to borrow a small amount of money over a short period of time, a bank overdraft can be a cheap way to borrow money. However, the terms vary significantly across different lenders and so the interest rates are highly dependent on the bank you’re with.

You might find that if you’ve been with your bank for a while, they offer more favourable terms - it’s worth contacting them to see what their options are.

For more information on borrowing and loans, take a look at our guides.

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Whether you're planning on some home improvements, replacing your car or simply getting your finances in order, a loan from Freedom Finance could be more affordable than you think. Use our calculator above to find the ideal loan for you. All quotations given are for illustrative purposes only. Credit subject to status. The rate you are offered will depend on your personal circumstances, credit assessment procedures and other related factors.