When and How to Shop for a Loan
If you're thinking of getting a loan but aren't exactly sure
whether the current loan market is likely to produce a good
interest rate, you might want to do a little bit of basic
research into the interest rates that are offered both locally
and nationally, as well as the various loan rates that are
offered by different banks and lenders in your local area.
Below are some suggestions for how to tell whether or not the
time is right for you to apply for a loan, as well as tips on
how to shop around so as to find the best loan that you can get.
Researching national rates
The first thing that you need to do when trying to determine
whether the time is right to apply for a loan is to do a little
bit of research so as to find out what the base national
interest rate is.
The interest rates that are set nationally are the basis for all
interest rates, though some cities and localities may increase
their rates from that point.
It's also a good idea to find out what the most recent changes
in national interest rates have been, and whether there has been
an increase or a decline as the rates change.
Anticipating rate changes
During your research of national interest rates it would be
advisable to look for signs that the interest rate might be
changing in the near future. These changes are often anticipated
well in advance, and information about potential changes can
often be found in financial journals, tabloids, and newspapers
before the actual changes are announced.
If you find information that shows an interest rate increase is
on its way, then you would be best served to get a loan before
the increase... however, if you find that interest rates are
going to be lowering in the near future then you might do better
to wait until the rates go down so that you can save a little
bit of money on interest.
If you find that there isn't any pending rate change in the near
future then you'll likely do just as well shopping for a loan
now as you would if you decide to wait.
Credit and collateral Of course, there are other factors that
can influence the amount that you pay for your loan aside from
simply the base interest rates.
Two of the most important of these factors are your credit score
and the collateral that you have to secure the loan... after
all, these are what the bank or lender are going to look at to
determine whether to approve you for the loan and what interest
rate to set for your payments.
Your credit score tells the potential lender whether you've had
problems repaying your debts in the past, and the collateral
that you use guarantees that they'll get their money back even
if you default on the loan.
Using high value collateral that has an easily-accessible market
(such as an automobile or real estate) can generally make a
difference in cases where your credit is less than perfect.
Shopping for the best loan
Finally, it's important to shop around for the best deal on a
loan instead of simply accepting the first loan offer that you
receive.
By requesting quotes from a variety of banks, online lenders,
and finance companies you should be able to determine which
lender is willing to offer you the best rates, and find the
right loan for the right price.
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