The interest at which you get your consumer credit is obviously one of the biggest concerns hovering in your mind when you’re trying to choose the option that suits you best. But exactly how do you choose the best one? You could find the best rates in the market
Fixed Or Variable?
A few months ago, every lender said the fixed rate was the way to go because the credit crunch could hike up rates even more. But now that the rates have been consistently going down, everyone’s saying that variable is the way to go. The basic difference is the variable rate will change with changes in the market – this could mean an increase or a decrease in your repayment amount. With a fixed rate, your repayment amount stays fixed every month irrespective of any changes in the market.
Truth is that every situation and every loan is different. So, talk to a professional to see which one suits you best.
Ask Questions
I’m assuming you will be looking around a fair bit before you settle for your choice of loan. When you’re going to each lender, make sure you ask them enough questions about the loan and the rates in particular. When you understand exactly what you’re getting into, you’re likely to know the better from the worse.
Your Credit Report
Before you apply for a loan, obtain a copy of your credit report from one of three credit bureaus – Experian, TransUnion or Equifax. Take a good look at it and see if there’s anything a lender can hold against you. If there are blemishes, make an attempt to get rid of them before you apply for credit. Once this is done, your perfect (or almost perfect) credit report is more likely to attract the best rates in the market.
A Down Payment
Say you’re borrowing $5000 but you can pay off $2000 immediately with the savings that you have. This is called as a down payment and if you’re able to make this payment, lenders can sometimes reduce the rate and offer you better choices.
Use Your Connections
When you’re borrowing money, try and think of someone you might know who’s in the industry. For example, a friend who’s a broker can help you get the best rates because he knows the industry. Remember this; lenders usually make a fair bit of profit on the rates that they charge you. So if you have some inside info (the legal kind!), you might be able to get the best deal in town!
Get some advice, look around and with a little bit of effort, you could find the best rates in the market.