Top 5 Loan Tips: How to Get an Affordable Loan?
Finding a cheap loan is no accident, but you can improve your chances in the loan market yourself. Here are the top five tips to help everyone get a cheap loan.
Use a loan comparison service
With the help of online loan comparison services, it is now easy to compare loan products offered by financial institutions and banks and thus find a cheap loan.
A loan comparison saves you both time and money. For example, work by applying to the service the amount of loan he wants, as well as information about his work situation and net income. Based on this information, the system compares the loans of different banks and financial institutions, for example on the basis of interest rates, and limits the most suitable loans for the applicant. As a result of the comparison, the applicant will receive five pre-analyzed loan options from which he or she can choose.
A key benefit of loan comparisons is customization: since the system leverages the applicant’s unique information, he or she will only be provided with loan options based on the customer profile. The service is also free of charge.
Loans and their financing companies can also be traditionally compared by reading loan reviews based on genuine user experience.
Loan comparison is one way to find an affordable loan.
Pay off the loan as soon as possible
A cheap loan is often one that is repaid as quickly as possible. This can be illustrated with a simple example calculation.
Take a loan of USD 10,000 with a nominal interest rate of 10% and an account management fee of USD 4 per month. As the loan maturity is extended, the loan expense items change as follows:
- 4-year payment period : 48 installments, monthly installment of USD 253, total costs of USD 2,366
- 8-year payment period : 96 installments, monthly installment USD 152, total costs USD 4,951
- 12-year payment period : 144 installments, monthly installment 120 USD, total expenses 7,785 USD
By extending the repayment term from four to eight years, the monthly installment of the loan is attractive, but at the same time the total cost of the loan more than triples. When applying for a loan, many people only think about how much monthly installment their own income will be. Of course, the monthly installment as small as possible gives flexibility to the economy, but especially in the case of large loans, you have to pay a heavy price for flexibility. If you get a loan repayment period reduced by one year, you can save up to hundreds of dollars.
Take a consumer credit, not a quick call
Banks and financial institutions that provide consumer credit carefully assess the solvency of their customers and can therefore rely on the customer to repay their debt. Therefore, consumer credit is the most affordable way to obtain a loan without collateral.
Express leasing companies give a generous loan, but as a result they charge high interest rates – even when the consumer thinks he has taken a “non-interest bearing loan”.
Many people who have fallen into a quick nip have fallen into such difficult financial distress with their debt that they simply cannot pay off the loan. However, many trickle companies operate on the basis that a sufficient number of clients get paid for the loan and its heavy costs: the idea is that debt-settling clients will also set off credit losses caused by insolvent clients.
Instant tricks are marketed by getting a loan immediately, but nowadays you can also get a consumer credit in a day or two. In other words, consumer credit is also a relatively fast loan if you can predict the need for money even within a couple of days.
Take one big loan instead of several small loans
The total cost of a loan usually consists of three items: the nominal interest rate, the account management fee and the opening fee. The first two are ongoing charges, whereas the opening fee is only charged when the loan is opened.
By taking one big loan instead of several smaller ones, you can save money in two ways. First of all, you pay only one loan per account, which saves you at least tens of dollars per year. Secondly, large loans often have a lower interest rate on small loans, so financing one expense with a larger consumer loan will also reduce interest costs.
In addition to saving money, one loan facilitates financial management by reducing the amount of bills to be paid and due dates.
Take advantage of your credit card for a small loan need
One way to get a cheap loan – even free – is to use a credit card. However, the drawbacks to using credit are that the credit card is not granted to everyone, and that the payment period and loan amount are strictly limited depending on the lender.
For example, a credit card is a good option when you have to make a surprise purchase that you know you will be able to pay for next month’s salary. In fact, many credit card companies have an interest-free payment period of about 30 days, which should be utilized as needed. After that, you pay an annual interest rate on the credit, which is quite cheap: usually 7-9%, but this varies from credit company to company.