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Borrowing on a Budget

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We all know that whenever we’re borrowing money, there’s always a price to pay, and the amount we repay will always be more than what we borrowed. However, that does not mean that you don’t have to care about your borrowing terms because you’ll be paying more anyway. Even with borrowing, you can still save money and this guide will show you how.

Check Your Credit Report

The first thing you shouldn’t miss whenever you’re trying to apply for a loan is to check your credit report. You might be wondering how this can help you save money. Unfortunately, your credit score has a bearing on your every loan application, because the terms you will get will most likely be based on how good your credit score is. Thus, what you need before applying is to know where you stand. If you go to the lender without any idea that your credit is actually admirable, you’ll never realize that you’ll be able to negotiate for a better deal. In short, your credit report, and your awareness of it, will serve as your leverage.

Find the Lowest APR

One of the major aspects to look into when you’re applying for a loan is the interest rate. Definitely, you’ll want one with the lowest rates to have the biggest savings. However, aside from the APR, there are other factors to check, as the amount of down payment and the duration of the loan.

Prepare a Sizable Down payment

If you’re applying for a mortgage or auto loan, you’ll most likely have to prepare a certain amount of down payment before you get approved. However, a down payment is not only a requirement, but you can also use it to your advantage. If you can afford to shell out a higher amount of down payment than the minimum required, it can lower your APR, and also shorten the duration of the loan. Thus, you’ll be able to pay off the loan more quickly, and in the process you would have paid for less interests as well.

Keep Your Term Short

In relation to above, you should also inquire about the length of the duration of the loan. There are loans which offer lower interest rates but are payable in longer periods, thus you would have paid more in the long run. While a sizable down payment can help you get the best of both worlds, it might not always be possible to produce a hefty sum. In this case, all you’re left with is finding a balance between the APR and the length of the term, and make sure that you are not paying for more than what is necessary.

Perform Comparison Shopping

Yes, even if you are a borrower and it might seem that you are the one in need of a favor, you still have the right to choose among lenders. There are a lot of borrowing options available out there, and if you have good credit, you’ll have better chances of finding a good deal, so keep your eyes open.

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