Applying for a loan can be a long and difficult process. You may feel overwhelmed and not know where to start. There are so many different numbers and terms to try to keep straight.
If you’re like most people, you apply for a loan the same way you study for a test. You try to cram all the information in as fast as possible, and then make a decision quickly, before the information fades. A few days later, you can no longer remember the list of terms you just learned.
If you can no longer remember the name of the assassinated dignitary whose death brought on the start of the First World War, there’s no need to fret. That won’t come up in your everyday life – unless, of course, you’re really into pub trivia.
But loan terms, on the other hand, are useful beyond the day when the bank deposits money into your account.
In this article, we’re going to cover some of the basic information you’ll need in order to make your next big financial decision.
Don’t worry; we’ll try not to make it too painful!
Time to Start Anew
Right about now you might be asking yourself, “Why do I need to know this stuff? I’ve already secured all of my loans years ago.” If so, you’re starting to sound like you’re back in school. Good for you, feeling all young and free.
But seriously, even if you are not currently in the market for a loan, this can be valuable information.
If you really did secure your loans years ago, it never hurts to take a look at what refinancing can offer you. You may be able to find a lower rate if you do a little digging.
Now is the perfect time for you to collect all of your relevant financial information.
If you’re like most people, you may have more than one line of credit open. Some you might not even think about on a daily basis.
First, there’s your mortgage. Many people lock in their rates for up to thirty years at a time for this hefty loan. They become so habituated to paying month after month, year in and year out, that they forget that change is possible. You may be able to lower your payments if you refinance.
But it doesn’t stop with a mortgage. What about a car loan? That is another thing that you may be able to renegotiate for a lower monthly payment.
The list goes on and on. How about your credit card debt? Go dig up your most recent statement and see how much you have left to pay. If you carry a balance month to month, you may want to have it ready for the next step in our process.
If you have any outstanding loans that haven’t been covered yet, don’t be afraid to bring them to the table. Sure, it can be a little painful to look at all of that information all at once. It’s almost like looking directly into the sun. But I promise you, it’s going to be worth it.
Why Refinance?
Right about now you might be wondering, “Why have I done all this work? Why have I gazed into the center of my financial universe?” If so, you have a colorful way with words.
The reason you have gathered all of this information together is so that you could get a clear look at your current financial situation.
The conditions of all of your different loans probably have different terms. You probably got a mortgage one year, your car loan several years later, and your credit card on a third, separate date.
You’re looking at different interest rates, different balances, and perhaps even different banking institutions. It may seem complicated, but never fear. Click here for more information about current interest rates.
The first benefit of refinancing is that you can consolidate your debt. Instead of paying three or more loans off each month, you can make one payment.
This alone could be worth the time it would take you to complete this process. If you’ve ever lost track and forgotten a payment (hey, it happens to the best of us), you know that late fees can add up quickly. Having one payment helps to ensure that that doesn’t happen.
But that’s not the only reason to refinance. According to the World Bank, interest rates are at their lowest point since the year two thousand and thirteen. This means that if any of your loans are nine years old or less, you can stand to save money through the refinancing process
Are you still not sure whether this process is right for you?
By taking out a loan to pay off your other outstanding loans, you’ll be saving more than a few dollars. That’s because a consumer loan typically has a much lower interest rate than, say, the one on your credit card.
The interest rate on a credit card can be as high as twenty percent. That means that if you owe one hundred kroner on your credit card, you would have to add twenty kroner to that total in order to pay it off. Click the link: https://en.wikipedia.org/wiki/Credit_card for more information about credit cards.
The same debt on a consumer loan is much different. Typically these loans have rates between five and eight percent. That means for the same one hundred kroner in debt, you would only be adding five to eight kroner to your total. That means that you could be paying a quarter of the interest you’re currently paying.
Scale these numbers up and you’ll see how much of a difference this can make. Why pay hundreds or thousands more than you have to?
If you want to throw money away, there’s more fun ways to do it than to give it to the bank. You could just throw it into the wind, if you really wanted to. At least that way you would get to watch it flutter in the breeze. At least that’s something you’ve probably never seen before.
Loan Terms
Let’s face it. You’re older and wiser now than when you first started borrowing money from the bank. Sure, there are some negative aspects of aging. Your lower back might hurt more than it did nine years ago. And your hair may be more brittle and prone to break.
But there are lots of benefits to aging, too.
Perhaps you’ve gotten a raise, or even several, since you first started accumulating debt.
Maybe you have more to offer as collateral than you did in the early two thousands. It’s possible that now you have a spouse or partner who is willing to cosign for you in order to secure a lower rate.
And if you’re like most people, you’ve probably gotten more responsible as you’ve gotten older. You may have a history of making payments on time that can speak to your benefit when it comes time to lay it on the line for the bank.
Why not take advantage of these assets? They can all factor in when you apply for a new loan.
Refinancing Calculator
Once you’ve decided that it’s worth your while to try out this whole refinancing thing, you’ve finally come to the point in time where it’s beneficial to use a refinansieringskalkulator, or refinancing calculator.
This is an online tool that can help you predict what your payments would be on a new loan.
You could save hundreds or even thousands of dollars by refinancing your loans. A calculator can help you make accurate predictions about what you can expect before you even begin to contact banks. Being armed with this knowledge can help you take the steps you need to achieve financial independence. Now that you know, it’s time to get calculating!
