In order to get the most inexpensive secured loan possible you need to watch some factors closely. The main things to consider are: The Interest Rate, Fees, Costs, Penalty Fees, loan length and loan amount. All this factors need to be considered as a system and not as separated variables.

The Interest Rate

The interest rate (A.k.a. APR) is the main variable you need to watch closely. When comparing loans, you obviously want the lowest interest rate available. However, the interest rate has to be considered as a single variable and compared with the rest of them before selecting a loan. You may get a lower interest rate, but yet, a more expensive loan due to fees and costs.

Variable interest rates are typically lower than fixed interest rates but may turn to be higher over time if market conditions worsen. You can always refinance your loan, get better rates and change between fixed or variable rates but be aware of penalty fees. Since a refinance loan is taken in order to repay the remaining of the current mortgage, if there are any prepaying penalty fees you may end up loosing money by refinancing.

Costs and Fees

Secured Loans usually come with many costs and fees, such as closing costs, collateral related costs, administrative fees, etc. This category can also include life insurance costs, fire insurance costs, civil responsibility insurance costs, etc. You need to ask the lender for a complete and detailed list of all costs and fees charged.

Beware also of hidden fees. It is a common practice among lenders not to disclose in advertisements certain costs and fees that will then appear on your bill. Its a smart thing to do, to ask the lender to fax you a copy of the contract prior to signing it in order to analyze it thoroughly.

Penalty Fees

There are mainly two types of penalty fees: The ones associated with prepayments and the ones associated with a missed or late payment. The lender has designed the loan in order to max out the amount of money he can obtain from the capital he has lent. In order for him to make the most out of his money, the lender needs you to pay the amount agreed within the agreed time periods.

Any changes can make the lender loose money and in order to compensate for the loss he will charge additional fees. Late payment and missed payment fees are always present in any kind of loan. If you dont pay on time or if you fail to pay one month, youll be required to pay an extra amount the next time your installment is due. Bear in mind that more than one missed payment can allow the lender to claim the whole debt and take legal action against you.

Prepaying penalty fees are not always present within the loan terms. If present, youll be charged an extra amount of money when you pay any sum above what you are supposed to pay every month. When you pay the overall debt, this fee is also known as pre-cancellation fee.

Loan length and Loan Amount

These two variables are directly related to the loans overall cost. A longer loan length will imply more interests and thus higher costs while a shorter loan length, will imply less interests and a lower overall cost. The loan amount works in a similar way, the higher the loan amount, the more money youll have to pay due to interests. Thats why you need to request just the loan amount you need and repay it as soon as possible.