The basis point of your secured loan is the amount of money you are borrowing. So if you are borrowing £10,000, then that is the first cost to consider in the overall cost of your secured loan. So far, then, your overall cost of your secured loan is £10,000.
The next cost you need to add into your overall cost of your loan is the interest or annual percentage rate - also known as the APR. This is what the bank or other lender charges you for lending you the money on your loan. You also need to add in one additional point to the base interest rate you are receiving. For example, if the current APR is 5%, the lender will probably offer you an interest rate of at least 6%.
How long are you taking the secured loan out for? Most secured loans have a repayment time frame of between three to five years, with some loans going for 10 to 15 years. The length of time you take the loan out for combined with the annual interest rate will determine the overall amount of interest you are charged for the life of the loan.
You can lower the cost of your loan by making a down payment on the loan. This is usually done when you are purchasing a home or a car. Finally, you need to add in any arrangement fees that may be charged for processing the loan. Administration, paperwork, time spent on the loan processing and more can affect the amount that is charged on the arrangement fee. Most secured loans have an arrangement fee of around £1,000 to £2,000 and this number can change at any time, so it is advisable to ask ahead of time what the current arrangement fees are.
It takes about thirty days from start to finish to get a secured loan awarded to you. The interest rate will be locked into place but this will only be for a short period of time. You have to close on the loan before the lock in period is over. Occasionally it will take longer than 30 days to get the loan approved and completed, and if this happens the lender has the choice of awarding you a lower interest rate if the rate drops prior to you closing the loan. Otherwise most lenders try to honour the lower interest rate.