NEED a loan? Sshh, don’t tell anyone but I’ve a naughty – yet legal way – to do it for a fraction of the cost.

Simply “twist” a credit card (see below to find out how).

In fact, while even the cheapest 1,500 loan is 18.7 per cent, my way it’s just 5.6 per cent.

And it’s right to kick loan companies in their crown jewels – because disgracefully personal loan rates are at a NINE-YEAR HIGH, even though UK interest rates are their lowest for over 200 years.

So first ask yourself whether it’s really worth getting into debt, minimise your borrowing, and follow this checklist…

SECURED IS BAD

“Secured” or “homeowner” loans sound good, yet it’s lenders not you that get the security – they can grab your home if you can’t repay. If it says “secure” avoid.

BEWARE LENDERS’ PPI

These payment protection insurance policies can add 1,500 to loans costs, but lenders love to flog ‘em as they are so profitable.

They are designed to pay out for 12 months in the event of illness or unemployment.

If you need cover, get quotes from specialist PPI insurers like Paymentcare or British Insurance which are usually less than half the bank’s cost.

REPAY QUICKLY

Loans with shorter terms are cheaper as the interest has less time to accrue. E.g. borrow 10,000 at 8 per cent over three years and the interest cost is 1,280, the same over 10 years is 4,560.

DO a BUDGET

If you can’t afford repayments, DON’T BORROW. Miss even one repayment and it can start a nightmare.

Use budgetbrain.com to plan what you can afford.

Now on to the cheapest deals…

Best buy deals

LOANS are called “structured” repayments as unlike a credit card, you repay a set amount a month.

You select the amount and borrowing term, the interest is fixed, and the lender calculates how much it takes to clear the entire debt plus interest by the term’s end.

BEST-BUY UNINSURED UNSECURED LOANS. 1,000 – 1,999: Alliance & Leicester 18.7% APR; 2,000 – 4,999: Post Office 13.9% APR; 5,000 – 7,500: Tesco, A&L 8.9% APR; 7,500 – 15,000: Alliance & Leicester, Sainsbury’s (with a Nectar Card) 7.9%; 15,000+: Tesco 8.4% APR.

More best-buys and a calculator to check costs at moneysavingexpert.com/loans.

DON’T OVER APPLY: Sadly these days all loans are “typical rate” meaning only two-thirds of those accepted actually get the listed rate, others pay more.

The only way to find out what you will pay, and if you’ve been accepted is to apply, yet applications impact your credit score, so if that loan’s too costly it’s more difficult to get another. This vicious circle effectively means you’re penalised for shopping around.

So keep applications to a minimum and double-check the companies’ customer requirements before applying.

If you’ve a poor credit score, it’s worth checking out abcul.org to see if there’s a local non-profit credit union that will lend to you.

Twist the plastic

AS the cheapest credit cards MASSIVELY undercut the cheapest loans, the trick is to twist one into replicating a loan’s fixed interest and get it to pay money directly into your bank account.

How it works: a few cards offer a hidden facility that let new customers shift cash from the card straight into your bank account, so you then owe the card that amount. yet never spend on these cards – then the charges soar and the savings vanish.

Which cards? My top picks are…

Repay in under 16 months: Virgin is 0% for 16 months with a 4% fee, after that rates rocket to 20.6%, so ensure its cleared by then.

Repay in over 16 months: Within 60 days of getting the card for a 1.5% fee MBNA’s Rate for Life charges 5.6% interest which lasts until ALL the debt shifted to it is cleared.

Fix your repayments: DANGER! you can choose what you repay each month with these credit cards.

To truly replicate a loan, enforce self-discipline by setting up a direct debit to repay the same monthly amount you would’ve done with a loan.

This way you’ll ensure both the debt is cleared in time and avoid missed repayments.