A lot of lenders will brag about having the lowest rates or the best deals. But when you want more details – when you want the actual facts and figures involving their loan rates – they become much more elusive.
It’s easy to say “we beat out competitor” because legally, you don’t have to actually prove that it is true. Saying “we are the best lender” is one thing, but advertising false numbers for your loan rates is another. It is, in fact, illegal.
For this reason many lenders will bury the truth deep within the fine print of their contracts and paperwork.
It’s up to you, as the borrower, to put aside all the bold misleading statements and figure out what your bottom line is going to be.
In other words, how can you find the best loan rates?
No matter where you borrow, a loan will cost you. Lenders are like any other business, so they don’t just give money away. There will be fees, or interest, or fees and interest, and don’t let any number of advertisements trick you into thinking otherwise.
Before borrowing money from any lender, make sure you ask (and get answers to) all of the following questions:
- What is the APR?
- What are the additional fees?
- Is there a penalty for early payment?
- Is there a final “balloon” payment?
- Are the loan rates locked in or variable?
- Does the lender offer a repayment schedule, listing the dates and amounts for each payment?
Get this information from several lenders so you can compare and contrast your options. And this is very important – get all of these answers in writing!
The Loan rates (also called interest or APR) are a key aspect for the business model of any lender. When a lender does not post their rates, it’s no different from a coffee shop hiding how much their mocha lattes cost. In other words – don’t trust a lender that won’t tell you their rates.
When you agree to a loan it is not official until you sign the contract. Once that contract is signed it is binding for both you and the lender.
So before you sign read it. Read it all, and read it closely. If there is anything unusual or that you don’t understand, ask your questions and get clarification. Do not assume you can work it out after you sign. Work it out before you commit!
The loan rates should be clearly labeled on the contract, as well as the repayment window (or “life” of the loan). Any and all associates fees should also be stipulated here.
Once signed, the lender must adhere to the terms set forth in this contract. So make no mistakes, and be careful!
Once they have you “on the hook” some lenders will do whatever it takes to keep you there. Make sure your lender is reputable is allows you to make extra payments and allows you the option of paying your loan off early. It’s a great way to save money on APR. If a lender refuses to let you pay a loan off early, that is a major red flag.