For some, it’s a borrower’s market

FANCY a new car, luxury holiday or that longed-for loft conversion but don’t have the cash? This could be the moment for you to bag a bargain. As businesses struggle amid the economic downturn, they are offering some very good deals, at least to certain clients. With care, you may be able to net an attractive borrowing rate.

Andrew Hagger, at price comparison website Moneynet.co.uk, says: “If you’re credit record is in good shape, there are some excellent borrowing options at the moment.”
However, he warns that getting a good credit deal should only be part of the consideration when making a major purchase, and that people need to think carefully before taking on more debt.

“If the repayments will take up a big chunk of your disposable income, could you still afford to go out, buy clothes and go on holiday or would it mean being careful with your cash?

“With the government spending cuts yet to bite, also consider how secure your job is and how you’d cope if you lost it.”

If you’ve taken everything into account and feel able to borrow to fund that big purchase, here are the options for savvy borrowers:

CREDIT CARDS
If you can repay the loan amount in 12 months, then consider the Tesco Clubcard credit card, which gives zero per cent on purchases for 13 months.

If you need slightly longer, make the purchase on your existing credit card and switch the balance to Barclaycard Platinum, which gives 17 months interest-free on transfers. You’ll need to pay a one-off fee of 2.9 per cent of the amount transferred, but it’s a price worth paying for such a long zero per cent period.

PERSONAL LOANS
If you’re considering a purchase such as a new car or home improvement, that will take a few years, not months, to repay, personal loan rates are competitive.

With the current best-buy loan from Sainsbury’s Finance you can borrow between £7,500 and £15,000 at a typical rate of 7.2 per cent. If you borrowed £10,000 over five years, you’d repay £11,873.

Note that this is a typical rate: the rate you’re offered will depend on how much you want to borrow and your credit score.

Louise Holmes at Moneyfacts.co.uk, the financial data website, says: “Take control of your credit. Check your status online via sites such as CreditExpert.com to see how clean your record is and whether you’ll actually be accepted.”

EXTEND YOUR MORTGAGE
If you’re looking to spend serious money – perhaps on a new kitchen or loft extension – consider an advance on your mortgage.

“The rates will be far lower and, in many cases, you can make overpayments so it doesn’t take 25 years to repay,” says Hagger.

RETAIL FINANCE
Car dealers and furniture showrooms often push their own finance, and are increasingly offering zero per cent deals to shift stock.

Do your homework. Ask for the total cost of finance, including fees, and find out if there are penalties for repaying early.