If there's one thing it's always worth doing, it's shopping
around for best deal. This is generally true for all purchases
you're going to make, but one place it's more important than
most is with loans. Many people don't think about it too much,
but loans are for many people, the single biggest financial
transactions they'll make in their lives.
All the major purchases you'll make will involve credit of some
sort. If you're buying a house you'll be searching for a
mortgage. If you're buying a new car it'll be auto finance. When
you travel you'll likely need a credit card if you don't already
have one. Remodelling your home, paying for college, for almost
everyone, they involve a significant amount of credit.
Shop Around
So it's 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
you're 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.
You've Got To Haggle
For example, if a rate seems too high to you, simply tell them
that, and ask if there's a better rate available. Often their
first offer is not the lowest they're willing to lend at.
Another thing you can do is offer security for the loan. If you
own you're 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. You'd be surprised at the difference in rate you'll
get simply for offering security.
Mortgages
If it's a mortgage you're 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. You're 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 dealer's 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.
About the author:
Joseph Kenny is the webmaster of the loan information sites
http://www.selectloans.co.uk
/ and also
http://www.ukpersona
lloanstore.co.uk. At the Personal Loan Store you can find
some of the latest
personal loans explained in detail.
