How to get a loan at a cheaper interest rate

Most people that look to buy a new car, boat, motorcycle or caravan will also be in the market for a loan. Delve deeper and most will also be wanting the cheapest loan that is, at the cheapest interest rate. While there is a plethora of sources and information on where to get a loan, there is less revealed about how to get a loan at a cheaper interest rate.

Cheap loans are advertised but questions can arise around whether they apply to all-comers, is it a ‘too-good-to-be-true’ offer and are there any catches. Those that don’t fit the criteria as set for these cheap loans may want to know how they can be eligible.

Knowing how to get a loan at a cheaper interest rate involves being across the market, the application process and what steps can be done to improve the chances. That may all sound like a lot of work but it doesn’t have to be. We’re setting out the basics to provide an overview and empower those seeking loans to work towards their goal of a cheaper interest rate.

How Interest Rates are Set

The Reserve Bank of Australia (RBA) is the body that is responsible for setting what is known as the cash rate as part of setting monetary policy for Australia. Each country has a central bank which sets this ‘base’ for interest rates to control economic conditions. The cash rate that you may hear mentioned when RBA decisions are reported is not however the rate on consumer loans.

The cash rate is technically the interest charged on overnight borrowings for banks. It forms the basis for banks and other lenders to set the interest rates that they will charge on the different loans that they offer. They need to allow for their own expenses as a business and account for their risk assessment of different lending markets.

When the RBA increases the cash rate as it has done recently, lenders then respond by increasing their interest rates. The actual amount of lender rate increases may be larger or the same but rarely less than RBA rate hikes.

Lender and Market Differences

Differences can exist across different lending markets. For example, the interest rate on a new car loan may be different from the rate for a boat offered by the same lender. Lenders will make their own risk assessments of different markets when setting rates.

Rates also vary, sometimes considerably, between different banks, finance companies and for loans which are offered by dealers and through manufacturers. Each lender will have its own individual guidelines. This is demonstrated in our Interest Rate Comparison Table for personal car loans.

So that is the first major point to note when seeking how to get a loan at a cheaper interest rate. You need to find the lender that is offering the cheapest rates in the market for the goods you are purchasing.

Sounds like a lot of work and yes it can be if you decide to do it yourself. Quick estimates can be acquired through online portals such as our loan calculators. But these are generic calculators that do not take into account individual loan application details.

To get specific quotes based on your individual application, would require making application to many lenders. Once those multiple quotes are received, the process of analysing each one to identify which is actually the cheapest in overall terms begins.

It should be noted at this point that this process can have a negative side-effect. Lenders will report loan applications to the Credit Reporting Agencies for inclusion on a Credit Profile. Many applications for the same loan can be seen as a negative and damage the prospects.

The easy way to cover off on finding the cheapest interest rate from the many lenders in the market without risking damage to the credit report is to use our broker-style lender services. More on that to come.

Loan Application and Assessment Process

The area of consumer finance is regulated through ASIC. Licensed Credit Providers, including ourselves, must abide by the regulations as set by ASIC and follow Responsible Lender Guidelines. As a result of this regulation, there will be a level of uniformity in what is required to complete and submit a loan application form.

This will include details of the financial position, employment, residential and personal information. Lenders will then assess the details in each application and the credit profile of the applicant. The assessment is based on the risk factor. The creditworthiness of the individual in regard to repaying the loan.

The better the risk assessment, the cheaper the interest rate, in general terms. Maintaining a good credit score is critical to the process as is having a good balance sheet – owning more than owing. So paying off the balance on credit cards and other loans may contribute to a better assessment and, yes, cheaper interest rate.

Utilising our Services

As touched on above, using our services can be of significant benefit to individuals seeking cheaper interest rate loans. We operate like a finance broker and our services are available to individuals and businesses. We are accredited with over 40 lenders which means we can source loans from those banks and non-bank lenders on behalf of our customers.

When customers contact us for a loan, we source the cheapest interest rate offer from across this wide choice. Our consultants handle the loan application approval process, analyse and explain the loan offers and assist when the approval is granted and settlement is required with the seller.

Our services save individuals time and the risk to the credit score of making multiple applications for comparison purposes. So if you’re wondering how to get a loan with a cheaper interest rate, the answer is could be as easy as contacting Jade Finance.

Contact Jade Finance 1300 000 008 for how to get a loan with a cheaper interest rate