Owning a loan or financing already contracted, but having no prospect of getting it repaid in the short term, is not one of the most enjoyable situations in the world. Even worse if interest rates are high. But don’t give up. There is always a possibility of savings! The business is at least try to look for interest rates and lower rates. It may take a bit of work, but it will give you a return that will really be worth it!
These loans are offered by private companies that offer financing for the products they sell. These types of companies work with banks to enable them to offer personal loans to their clients and facilitate the purchase of their products.
We will then give 3 tips for this situation:
1) Credit Portability
Yes, it is possible to port your loan or financing to other financial entities that charge lower fees. There are conditions for this to be possible, but in most cases laws tend to protect the indebted. For example, financial institutions cannot refuse portability, which is a good start.
But, you will have to search hard to find the best rate options. And it will also take a dose of patience to understand all the clauses and sign all the paperwork. So a tip is: do the math on how much you will save. This will give you a good deal of motivation!
2) Analyze the ‘total costs’
When comparing, be sure to always review the Total Effective Cost. That is, it is not only useful to analyze the interest charged, you must also consider all other amounts involved and that will be charged to you, such as registration fees, insurance, taxes, among others.
Total Effective Cost is also information that financial institutions have been required to inform you since 2007, so do not hesitate to ask and demand this information.
3) Beware of ‘married sale’
A common practice is also to offer a ‘comrades’ interest loan or financing, provided you also purchase some other financial product from the same institution. It can be a capitalization bond, some kind of personal insurance or private pension. It may seem like a good deal at first, but you have to look carefully at these ‘offers’: hardly the financial institution will practice ‘philanthropy’ with you. So always be suspicious.