Good Credit = Cheap Loans
The best way to get cheap loans is to have good credit. If lenders believe you’re likely to repay as agreed, they’ll offer better rates and more options. Learn about your credit and how to keep it healthy.
Subsidized Loans
Some loans, such as student loans and first-time homebuyer programs, are extremely cheap loans. Under these programs, somebody else pays interest for you and reduces your total borrowing cost. Use them when you can.
Switching to Cheap Loans
If you already have loans outstanding, can you save money by switching to a better loan? It may be possible to refinance or consolidate with cheap loans. The tradeoff? You might pay more in interest over your lifetime (even with a lower interest rate), and you could put your home at risk. Consider the risks of cheap loans before refinancing.
Beware of money traps that appear to be cheap loans. For example, "no closing cost" loans always have a cost. You just can’t always see the costs. You may be able to turn existing expensive loans into cheap loans without refinancing. If you’re in financial trouble, your lender might change the terms of your loan to keep you from going under.
Analyzing Loans
How do you know which loans are cheap loans? Start with the loan’s annual percentage rate (APR). This number should include costs above and beyond the interest rate you pay, such as closing costs and other fees. While APR is a tool for finding cheap loans, you can’t just pick the lowest APR.
Peer to Peer Lending
Peer to peer lending may help you find cheap loans. If you can’t get a good deal at the bank, try asking other individuals. Your chances are a little better because you don’t have to pay for the advertising and overhead of large banks, and an individual may just want to help. Friends and family often offer cheap loans, but you have to be careful.
