The number one consideration when looking for personal finance should be how much of your hard-earned cash a loan is going to relieve you of. If you see a loaf of bread in a shop that costs 60p and a seemingly identical loaf right next to it for 90p, you'd be faced with a question: Should I choose the cheaper one, or is it cheaper because there's something wrong with it, in which case should I go with the 90p one? Some people would instinctively buy the cheaper one, others the more expensive, depending on the reasoning. After all, one of them might simply have the wrong price on it. Similarly, denim is denim but if a pair of jeans has a designer label on it, it can cost many multiples of the cost of an unbranded pair.

So can this strange human quirk be applied to all areas of spending? For example, is there going to be any difference between a loan with an APR of 8% and one with 16%? In other words, should the cheapest loans be snapped up or avoided? Boiled down to basics, money is money, and if you spend ?100 interest on a loan it's better than paying ?101. However you really need to look into the details of the loan to be able to assess what represents good value. For example, is the low rate for an introductory period only? Are you looking for a loan designed for high-risk borrowers when you're a low-risk borrower (i.e. you have a good credit rating)? Are there charges for paying off the loan early? Are there conditions that apply to low rate loan, thatmay not apply to the loan you need. A common criteria is the size of the loan, with larger loans often attracting lower rates of interest.

It may sound like stating the obvious, but the cheapest loan is the one that costs you the least to pay off, not the one with the lowest rate. And your personal circumstances could entitle you to a loan that costs much less than it would for someone else. But don't get into the mindset that a more expensive loan must in some way be ?better?, as the chances are it's probably simply expensive.

The best advice is to think very carefully about what you need, ask as many questions of the lender as possible and take a view on the most likely future situation you will find yourself in. By this we mean that there is little point in paying extra interest to get the flexibilty of paying a loan off early, if you are highly unlikely to be in the situation of making an early repayment.