We all like saving money. Saving money with loans may sound strange to many as loans are not directly associated with saving – but you can save money with loans. You can also interpret it all as saving money when you borrow and it can also be done.
In this article, we will address different situations where you can save money when you borrow and thus try to show good ways to use loans and how to think when looking for a good loan, to get a low interest rate and be able to save money.
Save money by collecting loans
There is an obvious way to save money by borrowing money and that is when you already have several smaller loans with high interest rates. Such loans, which have often been accumulated for a little longer, can often eat up large portions of your monthly budget with their high interest rates.
These small expensive loans are not very good or fun to draw with, but because they are expensive it is also more difficult to pay them off quickly. They often draw so much money each month that it is difficult to afford extra installments and the like. It can even be that they give you a bad economy, with small margins and where you have trouble getting around.
Pay off all the small expensive loans
One solution is to obtain a large, low-interest loan, which you then use to pay off all the small expensive loans. This is called collecting loans or solving expensive loans and is something that many lenders have focused a little extra on in recent years. By doing this, you can reduce your borrowing costs quite a bit and save a lot of money each month.
In order for it to work to collect its loans, one must ensure that a large private loan covers all or most of the old debt and that this loan has a clearly lower interest rate than them. If you have several loans with an interest rate of 20 – 30 percent and can get a private loan with maybe 10 percent interest, here you have made a savings of 50 – 66 percent straight off.
Of course, you should make sure to use your big loan to pay off your old expensive credits, not anything else. Another advantage is that you only need to keep track of a loan and a repayment instead of many. It makes it easier and smoother.
Compare offers when borrowing
If you have decided to take out a loan, you can save money by choosing the best offer, just like when you, for example, buy a new TV, sofa or go on vacation. When you buy something, it is common to compare prices in advance – for most people know that there may be different prices for exactly the same in different stores.
You can do exactly the same with loans, only when you compare lenders and their offers. This should be done before borrowing to find out who has the lowest interest rates and fees and best terms in general. The interest rate is what affects the cost of the loan the most, especially if you take out a large loan with a longer maturity.
If you look around at different banks and lenders to see what they have for interest rates and what they can offer you, you will probably be able to save some money on this. It is not always your own bank that has the best price on your loan and if you only choose the first best lenders that you find online, you are rarely given the best possible interest rate.
Use loan brokers to compare smoothly
Comparing loans can sometimes be a little tricky as few lenders print exactly what interest rate you receive (this is especially true for private loans and mortgages with SMS loans may have more fixed rates). Usually, you get an individually set interest rate based on your income, your old debts and other factors in your finances that determine how strong it is.
You must therefore apply before you can get a clear message about what interest rate you will receive. However, it is quite complicated and not too good to apply for loans from 10 – 20 different lenders, just to see what they offer. Firstly, it is generally useless and time-consuming and secondly, each lender takes a credit report in your name.
Too many credit reports are not so good and can lower your credit rating. Also, it is not so much fun to have to spend a lot of time and energy filling out applications with each lender separately. Fortunately, however, there is a solution to this that makes it clearly smoother.
There are now many so-called loan intermediaries, which have gathered many lenders and banks. You then only apply for a loan with them once and then they share the application with all the lenders with whom they partner. One advantage is then that they only make a single credit report in total, even though it is shared with many lenders.
What happens next is that any lender who may want to lend to you (if you meet their basic requirements) sends a quote with their best offer to you. You can then see offers from any lender who wants to lend to you and exactly what interest rate you can get. You choose the cheapest or best loan and only apply to them.
Thanks to the loan broker you can get a large number of offers for loans from different banks and lenders and you can then compare them against each other. This is a really good tool for saving money as you can weigh different loans against each other and choose the cheapest. There are many thousands of notes to save as interest rates can differ quite a bit.
A classic way to save money on your loan is to bargain and negotiate the interest rate on your mortgage. Banks often have good margins on mortgages and there is room to negotiate the interest rate down. This can save a lot of money, especially given that mortgages are so large. It is about a lot of money and over a very long time, which means that every little tenth of a percent makes a big difference in money.
You should always try to negotiate the interest rate on the mortgage and also check around among other banks to see what they have to offer. Many people settle for the interest rate the bank offers or stays with their regular bank just because they have always used it. But, as I said, you can save many thousands of dollars by questioning.
By negotiating the interest rate you can make substantial savings every year. It is almost always possible to bargain on interest rates as banks’ list interest rates are a bit higher than average rates. For example, the list interest rate may be 2 per cent while the average interest rates are about 1.5 per cent. Already there you have a saving of 25 percent. Furthermore, you can get a slightly lower interest rate than if you have good conditions in your economy, given that the average interest rate is just an average.