Credit and Finance Articles
Finding The Cheapest Loans
If thereís one thing itís always worth doing, itís shopping around for best deal. This is generally true for all purchases youíre going to make, but one place itís more important than most is with loans. Many people donít think about it too much, but loans are for many people, the single biggest financial transactions theyíll make in their lives.
All the major purchases youíll make will involve credit of some sort. If youíre buying a house youíll be searching for a mortgage. If youíre buying a new car itíll be auto finance. When you travel youíll likely need a credit card if you donít already have one. Remodelling your home, paying for college, for almost everyone, they involve a significant amount of credit.
So itís worth shopping around. If we spend a day or more looking for a good deal on a pair of jeans, why should we accept the first credit offer we receive? Loan rates and terms can vary enormously from lender to lender. All of them offer many different rates at the same time depending on the promotion youíre applying under. They will also be setting the rate according to your credit rating. The important thing to remember is that credit is a very flexible market and pretty much all lenders will be willing to negotiate rates and terms with you.
Youíve Got To Haggle
For example, if a rate seems too high to you, simply tell them that, and ask if thereís a better rate available. Often their first offer is not the lowest theyíre willing to lend at. Another thing you can do is offer security for the loan. If you own youíre home and are confident in your ability to repay the loan, maybe ask what the rate would be if it was secured over your home. Youíd be surprised at the difference in rate youíll get simply for offering security.
If itís a mortgage youíre negotiating, ask for both the variable and fixed rate. Typically the variable mortgage will be a good 0.2% to 0.5% cheaper. This is because you will be bearing the risk of an increase in interest rates. Auto finance is one of the most varying areas in the market. Youíre dealer might be offering you what seems like a good credit rate, but often if you agree to pay cash, the price of the car becomes cheaper, which means the loan is actually more expensive than it appears. If this is the case, try and get the finance from another lender and get the dealerís cash price for the car.
One other way of making a loan cheaper is by dropping optional extras such as loan repayment insurance. This is often offered when you take out a loan and can make a big difference to the cost of the loan.
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