Getting the best deal for a loan, regardless of the type of loan, is one of the best ways to save a lot of money. We often talk about saving money by reducing unnecessary expenses and that is true, but we also think that large financial commitments like loans offer even better savings opportunities.
So, how can you save money with a loan when the very definition of a loan is that you are going to get into debt? The answer is simple. You have to compare the lenders. For any Canadian on the loan market, comparing lenders is definitely something that everyone should consider. You will get the best deal, same thing for the lender, and overall, a better experience because you have taken the time to do your extensive research. You will find attached a step-by-step guide on how to compare lenders, which can be applied to any type of loan, be it a mortgage, a personal loan, car loan or even a credit card offer.
Step 1: Receive offers
Before you can compare lenders, you need to know what you are comparing. When you get in touch with a lender, talk about their offers. You will receive. The offer describes the details of the loan, how much you borrow, what will be your interest rate, the time of payments etc. Depending on the type of loan you are interested in and the lender, tenders tend to last for a period. Once the period is over, you may need to reapply or provide up-to-date information to receive a new offer. If you are looking for a mortgage, working with a mortgage broker is always a good option. He will do all the research work and you will benefit from a good deal. Be aware that mortgage brokers charge for their services, so you will need to decide if the convenience is worth it.
Step 2: Compare Offers
Once you have several offers, it’s time to compare them. While some offers may obviously be better than others, it can also be difficult to determine which offer is best for your specific needs. One lender may offer a lower interest rate while another may offer a more convenient repayment schedule. If you really want to save money, this is the stage where you should do your homework.
To compare your loan offers, you should consider all the following factors:
- Interest rate
- term of the loan
- Schedule of repayment
- Terms and conditions
- Overall cost of the loan
While you are comparing your loan offers, you should also consider any additional factors that are specific to your life or financial situation. If you already have a relationship with a lender, this can influence your decision. Or, if you want a specific repayment plan, you can give more weight to lenders who offer this type of plan. When it comes to your final decision, choosing the best deal that will save you the most money should be your priority. But, make sure you choose the best overall offer. Saving money is one thing, but working with a lender you do not trust or choosing a payment plan that just does not work for you could put your loan and your financial life at risk.
Comparison of interest rates on loans
Obviously, borrowing money does not come for free. Interest rates are the way lenders express to a borrower how much it will cost them to borrow a specific amount of money over a given period. The interest rates available to you have the greatest impact on your ability to save, so always make sure you are comfortable with the interest rate offered before accepting an offer of interest. ready. When comparing interest rates, be sure to look at both the stated interest rate and the annual percentage rate of charge (APR). This will help you determine what loan and what loan will help you save more money if it is one of your goals.
Comparison of loan conditions
After the interest rate, the duration of the loan is the second most important factor in determining how much your loan will cost you. In other words, the more time you need to repay a loan (the more time you have), the more interest you pay and the higher the overall cost of your loan. If you choose a lender that offers you a shorter term, your loan payments will be larger. Know that even if it will save you money in the long run, you will be more restricted monthly. So, it is important that you choose a lender based on your specific needs. The best loan for you may not be the best for another consumer.
If you are looking for a mortgage, the offer you will receive will usually be 5 to 10 years. At the end of this period, you will need to meet with your lender and discuss your mortgage contract. The total time needed to pay off the mortgage is called an amortization period. In Canada, the maximum amortization period is 35 years, but you can, of course, choose a shorter amortization period to pay off your loan faster while saving money on interest.
Compare loan fees
If you are looking to apply for a mortgage, you will have to pay several fees as well as closing costs. You can not work around them. However, if you are applying for a personal loan, you must be aware that there are crooks who are trying to defraud Canadian workers by charging them illegal fees, loan insurance and asking for upfront payments.
Comparison of repayment schedules
For all your bills, it is likely that you only need to make a monthly payment. But when it comes to loans, there are several options available to you.
- Monthly payments, when you make a payment per month.
- Twice a month, where you make two payments a month. Usually in the middle and at the end of the month.
- Weekly, where you make a payment per week.
- Every two weeks, when you make a payment every two weeks. This option is different from paying twice a month because you will end up making 2 extra payments in one year and pay off your loan faster.
Compare the overall cost of the loan
The factors above will affect the overall cost of your loan. So when you compare your loan offers, make sure you take all of that into consideration, especially if you are looking to save money.
Step 3: Negotiate
The third step to take is negotiation. Be aware that this is not always an option to negotiate, as some lenders are unable to modify the offers they offer to potential borrowers. Your best solution is to simply ask if the offer they have provided you with is the best deal possible.
If your lender does not want or can not negotiate on part of your loan offer, consider asking if there is anything you could work on to get a better deal, for example:
- Improve your credit rating
- Pay other debts
- Get a co-signer
- Ask for another type of loan that is smaller or different
- Provide guarantees
Taking control of your finances is always in your best interest, so do what you need to do to get the loan offer you want and deserve.
How can we help you find the best lender
We understand that not everyone has the time to compare several loan offers, but we can help you. Our loan referral system can get you in touch with a lender in your area who fits all your requirements.