Loans are part of the everyday economy and something you sometimes need. Some loans are more necessary and others are clearly more unnecessary, but regardless, we obviously want to try to find as good and cheap loans as possible. We want to reduce the cost of loans and save money where we can. Therefore, here are some great tips to help you cut costs or save money when you take out a bank loan.
The term bank loan is actually quite broad and a bit murky as it really only means a loan from a bank. Today, however, not all lenders are banks, as it used to be in the past. Today, there are many different players who lend money. A bank loan is usually equated with a private loan, but if you want to be a little freer in the interpretation then it can actually be a car loan or mortgage loan also if you borrow from a bank.
In this post, we will try to focus primarily on private loans, but there may be tips and hints for home loans and loans for vehicles as well, because there may also be money to save if you are a little smart.
Challenge the banks and check for the cheapest loan
The most classic tip for saving some money when borrowing is to compare loans and lenders and try to find the cheapest and best loan. It is a bit of a hinted tip but at the same time a little too good not to mention. It is particularly interesting nowadays when there are so many different players who are fighting for customers and competing with prices.
The reason why it is important to look around before you borrow is that lenders, like ordinary stores, may have different prices for their products. Just as it is worth looking around and comparing the price of a new TV before buying (which most people probably do), you should also look up loans.
The difference between comparing a TV and a loan is that a TV has a clear price that is easy to control but a loan you do not really know how much it costs before applying. This is because the interest rate is set individually according to your circumstances. You can thus get a price quote / quote only after you have submitted a loan application in most cases.
The options you have for comparing loans are the following;
You can go to an information and comparison site that lists many lenders and see what they have for interest rates and what other fees are available. It can make it easier to limit the number of interesting lenders and get a general picture of prices etc. However, you cannot get exactly what your loan will cost.
You can also choose to apply for a loan from a loan broker. These usually collect around 20 lenders and when you submit a single application it is forwarded to all the connected lenders and they can then send out a quote to you with their best offer. The advantage here is that the quote really shows your interest rate and your final price, so you know more exactly what it will cost. It is also smooth and you only have to make a single application, which is not binding (so you can regret it). This is also completely free of charge.
There are advantages and disadvantages both of looking around yourself and using a loan broker. The disadvantage of doing everything yourself is that it clearly takes more time and it is difficult to get a good picture of exactly what it can cost. You basically need to apply for a loan from each lender to know your exact interest rate. A loan broker does a lot of this work for you.
The disadvantage of using a loan broker is that although they often have many banks and lenders under their roof, they do not have all. Often some of the interesting lenders are taken, especially the large ordinary banks. These can also often be among the cheaper ones. So don’t forget to perhaps supplement your application with the loan broker with an application from one or two major banks.
You should keep this in mind when comparing loans
The things that can affect the cost of the loan are the interest rate, fees and how long you borrow. Of course, how long you borrow depends primarily on how long you feel you need to borrow. The longer you borrow, the less you pay off each month (which is good if you have a limited budget) but the loan becomes more expensive overall because you pay interest over a longer period.
Interest on the loan
The interest rate is what matters most to your loan. Especially if it is a large loan and / or loan for a long period. It has extra importance for eg mortgage loans where you borrow a lot of money for a very long time. Then even small differences in interest rates, such as 0.5 percent, can make a very big difference to your loan cost.
Smaller loan amounts often come together with a higher interest rate. Especially if you borrow from a slightly smaller lender who specializes in these small home loans. Avoid borrowing from the expensive players if you have the opportunity. Most often, banks have among the better interest rates, but do not just look at the classic old big banks. There are many new banks that are challenging such as Avanza and Nordnet, ICA Bank, Ikano Bank, Danske Bank, Collector Bank, Resurs Bank, Bank Norwegian etc.
Interest on mortgages
When it comes to mortgages, there are many other things to consider. Right for home loans, the interest rate is extra important and every tenth percent significant for the cost of the loan. Therefore, you really want to try to find the best possible mortgage. You should not be afraid to bargain on your mortgage and try to lower your interest rate. What those banks list is the so-called interest rate and it’s not the same as the interest rate you can actually get. Almost everyone can get a discount on this interest rate if they have a decent financial condition.