If theres one thing its always worth doing, its shopping around for best deal. This is generally true for all purchases youre going to make, but one place its more important than most is with loans. Many people dont think about it too much, but loans are for many people, the single biggest financial transactions theyll make in their lives.

All the major purchases youll make will involve credit of some sort. If youre buying a house youll be searching for a mortgage. If youre buying a new car itll be auto finance. When you travel youll likely need a credit card if you dont already have one. Remodelling your home, paying for college, for almost everyone, they involve a significant amount of credit.

Shop Around

So its worth shopping around. If we spend a day or more looking for a good deal on a pair of jeans, why should we accept the first credit offer we receive? Loan rates and terms can vary enormously from lender to lender. All of them offer many different rates at the same time depending on the promotion youre applying under. They will also be setting the rate according to your credit rating. The important thing to remember is that credit is a very flexible market and pretty much all lenders will be willing to negotiate rates and terms with you.

Youve Got To Haggle

For example, if a rate seems too high to you, simply tell them that, and ask if theres a better rate available. Often their first offer is not the lowest theyre willing to lend at. Another thing you can do is offer security for the loan. If you own youre home and are confident in your ability to repay the loan, maybe ask what the rate would be if it was secured over your home. Youd be surprised at the difference in rate youll get simply for offering security.

Mortgages

If its a mortgage youre negotiating, ask for both the variable and fixed rate. Typically the variable mortgage will be a good 0.2% to 0.5% cheaper. This is because you will be bearing the risk of an increase in interest rates. Auto finance is one of the most varying areas in the market. Youre dealer might be offering you what seems like a good credit rate, but often if you agree to pay cash, the price of the car becomes cheaper, which means the loan is actually more expensive than it appears. If this is the case, try and get the finance from another lender and get the dealers cash price for the car.

One other way of making a loan cheaper is by dropping optional extras such as loan repayment insurance. This is often offered when you take out a loan and can make a big difference to the cost of the loan.