The Most Expensive Ways to Borrow

By | 30/06/2018

There’s no right and wrong way to borrow money, rather it is all about what works for you and your finances. But there are ways that are more expensive than others. Sometimes these options might suit your needs better than a less expensive option. But whatever the case, you should always full understand what it is going to cost you to borrow the money and what the repayment terms are. Here we look at the different options from most to lease expensive.

PayDay loans

PayDay loans are a relatively new option for borrowing and have been somewhat demonised. However, it is true that they serve a purpose and if you use a good quality lender, you should get all the information upfront to make an informed decision. APR rates are sky high but you don’t take this kind of loan for a year – usually for a month or less.

Bad Credit loans

Bad credit loans are an option for people with a poor credit rating who need to borrow money for one reason or another. They can be offered over varying terms and will have a higher rate of interest than a normal loan because you have a poor credit rating. But if you can afford the payments, then it can be a way to start rebuilding your credit rating.

Guarantor Loans

Guarantor loans are a revamped version of an old idea – you borrow money and someone with a better credit score stands as guarantor. This means that if you don’t make the payments, the lender will turn to the guarantor and they will need to pay the payment instead. It is seen as an option for people with poor credit or for people just starting out on their financial journey.

Bad Credit Credit Cards

Like bad credit loans, bad credit credit cards offer a card to people who won’t get a normal credit card due to a poor history or rating. They have a higher rate of interest than a normal credit card but can be a good way to rebuild your credit history, as long as you can afford the repayments.

Credit Cards

Credit cards offer a wide range of interest rates with many giving a 0% interest rate as an introductory offer. If you can clear the debt before the period runs out, you won’t pay any interest. But make sure you can afford the payments if you don’t clear it in time and the interest starts to accumulate.

Finance Agreements

Finance agreements such as hire purchase normally have a good interest rate and you can even find ones that offer zero interest for a set period. Like a credit card, make sure you can afford the payments once the low interest rate period ends in case you can’t clear the balance.


Overdrafts from a bank or building society tend to have a low rate of interest but can be high on charges if you exceed it. It can be a good short-term source of extra funds but beware of those charges.


Loans are one of the most cost effective ways to borrow but the best interest rates aren’t always offered to everyone. These include bank loans and those from loan providers as well as secured loans where you borrow against your home.  In this situation, if you don’t pay back the loan, your home may be repossessed.


Re-mortgaging your house is probably the cheapest way to borrow money but remember, that small interest rate will be collected over 25 plus years. Also, if you fail to pay the payments, you can lose your home.

0% deals

0% interest deals are the best as you don’t pay anything for the borrowing. But beware the situation when the zero interest ends and ensure you can afford the payments if you haven’t cleared the balance by this time – some companies add the interest for the period of 0% on once this ends if you haven’t cleared the balance too.