The economic recovery has caused financial institutions to offer personal loans again and, as a consequence, the average interest rate applied falls to 8.43% APR, according to the latest date from December 2015 of the WhiteSpace Bank. In this sense, getting cheap loans is now easier but, regardless of the offer, there are other factors that will allow you to save several hundred euros. The financial comparator WishCash gives you the keys to lower the cost of our credits even more.
How to save on financing
In addition to searching and comparing among all the offers on the market and choosing the loan with the lowest APR, you must take into account three other keys that influence the cost of your financing and that you can modify to get the best financing at the lowest. . . . cost:
1. Take advantage of the links
The hiring of products linked to loans does not always mean paying more. There are many banks that offer discounts on the interest of the loans if you optionally hire some related products. However, it is important to know what related products to hire in order to save. Some links, such as direct debit or receipts, do not involve extra expenses, any reduction in interest in exchange will always be good. Other links, such as hiring insurance or credit cards, have an extra cost, so it will be necessary to calculate which of both options will be cheaper.
2. Do not fund commissions
Many offers allow us to include study and opening fees within the loan and thus pay them along with the monthly fees. Although, in principle, it seems a very comfortable option since you will not have to pay ahead of time, financing these expenses will also involve interest on commissions, in addition to interest on credit capital. In these cases, it is better to pay the cost of the commissions at the moment.
3. Amortize whenever possible
Reimbursing a portion of the credit that you have requested if you have extra liquidity will reduce your funding, since the capital that you return early will not generate interest. In addition, once amortized you can choose between reducing the monthly fee, or reducing the term and continuing to pay the same monthly payment.
The option that will save you more will be to reduce the term since the shorter the repayment term the less interest is paid. That is, a loan of $ 10,000 at 7% to be repaid over a period of 36 months (three years) will generate interest of $ 1,115, while a loan with the same conditions but with a repayment term of 60 months (five years) ) will generate interest of $ 1,880 (a difference of $ 765 in interest only).
Taking into account these three guidelines, you will see how you can save several hundred euros in interest, always taking into account your economic possibilities, that is, provided that your income allows you, for example, to increase the monthly fee to shorten the term. . . . , make early repayment or pay commissions before receiving credit capital.