Compare Loans
Compare secured loans? Absolutely! Just because a loan is secured by your home and has rates comparable to mortgage rates does not mean to say that it is the best deal available. A recent survey of 63 mortgage lenders in North Yorkshire showed a spread in interest rates of 4.2 percentage points. The highest rate was almost twice that of the lowest.
Let me put those figures in perspective for you. On a £100,000 mortgage, the additional interest paid over 25 years would amount to £80,150.68, more than double the total interest of £73,459.73 charged on the lowest-interest loan. Additional monthly cost? £267.17. Most of us would compare secured loans 'til the cows come home to have an extra £267.17 a month in our pockets to spend on whatever we want. How about you?
And what many people forget is that, unlike some countries where mortgage payments are tax deductible, you will be paying with after-tax money. Someone in the 40% tax bracket has to earn £445.28 a month to have an extra £267.17 to pay on the monthly mortgage. And that extra £80,150.68? You would need to earn $133,584.46 over 25 years to pay that amount after tax. That's £5,343.38 a year, or more than £100 a week. And that's just the extra amount above the cheapest rate. See now why it's important to compare secured loans and the interest charged on them?
If it's so important, why doesn't everyone do it? Clearly, some people pay the top rates or the firms charging them would not remain open.
There are likely as many reasons as there are people and situations. But one may be that applying for a loan, especially one that is essential to the person's wellbeing, is a stressful situation. It is not one that most people willingly undertake more times than they have to. Once approved, there is a large sigh of relief. The loan has been approved and the initial objective has been achieved. And this is where multi-thousand pound mistakes are made: the failure to compare secured loans.
Being granted home loans is not cause to let your guard down. In fact, what is required is a reprogramming of your approach. Instead of feeling grateful that your loan has been approved, and that you have been granted a reprieve of some sort, or that your wish has been granted, turn the tables. You are not the one being interviewed: the credit manager is. You are the one paying the bills, not the credit manager. You will be the one paying part of his salary, he does not pay yours.
Start to compare secured loans before you even know the credit manager's name, much less sit down with him or her. You first task is to find out what the going interest rate is at a list of institutions, the more the better. The chances are that if you require an adverse credit loans quote, you will have to pay a higher interest rate. Find out if there are special promotions for new customers. And find out if there are ways that the interest rates can be reduced. A change in terms can mean lower rates.
Review your credit record. Get your record from each of the credit agencies. You are entitled to it. Review it carefully. If there are errors that count against you, see that they are corrected. Do everything you can to improve the rating. Your credit rating can influence the interest rate you are charged on new loans.
Once you have done your homework and drawn up a budget of income and expenses, then and only then make an appointment with the credit manager to see if their institution is one that is prepared to earn the interest and fees you are offering. Remember, you are the customer. Don't be intimidated by financial institutions. After all, there's another one just down the road. And a savvy manager will expect you, as a good manager of your own money, to compare secured loans.
