cost of borrowing in the banking terminology is termed as loan
best ratesor interest rates. Interest in
simpler terms is the additional amount on the principal amount
borrowed, which a borrower has to pay to his lender. Interest
payment can also be defined as the cost of services rendered by
the moneylender. Loan rates are the real pinch for the borrower
and it becomes all the more necessary that best loan rates are
pocketed from the market. At times consumers may end up paying
interest, which are even more than the principal amount. In order
to avoid late stage repentance, it is imperative that a well thought
decision is taken while opting for loans. One has to choose from
the alternative loan rates available in the market.
of loan best rates
loan has interest rate as its rider. Though loan
best rates may differ among the lending institutions
and the lenders but the purpose is the same. Loan rates differ
for different products and for different types of loans. The general
categories into which the loan rates fall are as follows:
Interest rates that remain the same throughout the length of the
loan are termed as fixed rates. The moneylender can charge you
at the rate settled at the initial stage irrespective of the changes
that may take place with the passage of time. The repayment terms
are not only predictable but also remain stable. The repayment
amount that is defined at the start remains the same till the
end, no matter how frequently the interest rates fluctuate. Customers
going for long term loans prefer fixed rates.
Floating/adjustable/variable rates: Loan rates that are
dependent on the Prime Lending Rate (PLR) are termed as floating/adjustable/variable
rates. These rates keep on moving up or down depending upon the
PLR adjustment done by the federal/central bank. Such rates are
market driven and based on the macro economic indicators of the
economy. Such rates can be a boon at one particular moment and
the very next moment, it may become a curse.
These rates determine the payment amount on the basis of the base
rates. More often than not a set percentage above the base rate
is to be paid for a particular period or even for the entire period
of the loan.
Loan rates may rise with the changing economic scenario. However,
loan rates that are under the capped rates category don't rise above
the predefined level. Interest rates may be capped to rise only
1 or 2 percentage points in a year irrespective of the fact that
Loan rates may rise further in the market.
Discount rates: Such rates offer a rebate on the given
loan rate for a set period.
the best possible loan rate
cost of borrowing plays a pivotal role in the borrowing process.
Paying the hard earned money as interest pinches customers the
most. The need is to minimize the pinch and to keep it within
bearable limits, which is only possible by going for the best
best deals can be struck by being a well-informed customer. Loan
rates prevalent in the market must be studied and compared with
the rates being offered by the lending agencies. Customers who
are well informed reap the advantage by making the best deal from
the lending agencies. Make the needs amply clear and negotiate
on the terms and conditions offered by the lender. The total amount
that will be paid should be worked out for both the long term
and short-term loan rates. If you intend to buy an immoveable
property, long-term loans are the best as on such loans you are
bound to get reasonably low loan rates.
earn an attractive and true loan rate, refrain from misreporting
your assets, regular source(s) of income and other related information.
Presenting a true picture helps in bridging the gap between the
lender and borrower and the reward being an acceptable loan rate.
the present scenario, loan
best rates can be locked for a particular
period before finalizing the loan application. The advantage of
locking the loan rate is that the locked rate becomes applicable
even if the market pushes up the loan rates. Opting for a long
locking period is the best proposition.
and steps to get loan on best interest rates.
a loan is a simple job but getting a loan on best interest rates
is a challenge. The longer the term of the loan, larger will be
the interest payable. The ideal option is to borrow the bare minimum
and couple it with the shorter loan term to get the best interest
rates. However, there are a few things that need to be thought
off before making the final decision.
your current financial position and also pre-empt your financial
status over the next few years. Be a realistic borrower and assess
your future financial position in a conservative manner keeping
a buffer for unforeseen contingencies.
in depth the pros and cons of various types of loans and the interest
rates tagged to them for getting a feel of the topic and the market
trends. Calculate the total amount payable and simultaneously
assess your repaying capacity. It is good to study and contemplate
the rate trends but never get too obsessed with the rates, as
your speculations can prove wrong. Just be comfortable with your
decision on the loan rate.
is essential to understand the duties and the working pattern
of the moneylenders. The background knowledge of all the basic
aspects involved in the loan processes will also help you find
a right lender. Discuss all the modalities of the loan and the
repayment schedules with the lender or the lending agency. Make
an attempt to get the promise made by the lender in writing.
you have zeroed in on a good lender, you can shop for the
loan best rates that suit you the most. Take
the lender's offer and give him your offer. Bargaining with the
lender can be done keeping in mind the fact that his offer is based
on the income and credit expenses ratio. Evaluate the lender's offer
in terms of the sacrifice you are willing to make for fulfilling
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