How to Bargain for the Best Interest Rate?

Interest rates play a vital role in any economy by influencing monetary policy, investment, inflation, and unemployment. Interest rates are normally expressed in terms of percentage over the period of one year. It also refers to the charge the borrower has to pay for the amount he has taken on loan, or the amount a lender receives as a return for the money he has lent to the borrower. To put it simply, the interest is that additional amount that you have to pay in addition to the actual loan amount. This is basically the service charge of the lender.

Securing a loan such as a home loan in the current economic situation is not too difficult. But searching for the best loan is certainly a matter of great confusion. If you are not up to date or informed about the market, striking the best loan deal will be like beating around the bush, especially in a market where huge numbers of lenders are wooing the customers with an equally wide product range which they all claim to be the best and the cheapest.

Being the borrower your goal is to secure the maximum amount of loan for the lowest possible monthly repayment. The most important aspect that you should keep in mind, as a smart borrower, is to seek the lowest rate of interest that comes with the loan. In the market, loans are offered at various interest rates. Remember the following points:

* Higher interest rates are flatly ruled out unless you are in dire need of money.

* Fixed loan rates are safer as they remain the same despite all the fluctuations in the economy.

* Floating rates of interests is a good choice, but you should only consider this in stable economic conditions only.

Here are a few tips to help you seal the best loan package with a good interest rate:

* Explore the terms and conditions offered by various loan sources like banks, brokers and other credit institutions. You can also find a wide selection of loan products online.

* It is always possible to bargain with the moneylenders with regard to the interest rates. Interest rates vary with the type of loan and of course with different customers. The interest rates are higher for shorter term unsecured loans than the long-term loans.

* It is a good idea to take the loan at the end of the month as sales representatives are eager to meet their sales target and are more likely to lower the interest rate.

* Also avoid brokers as their charges are included in your interest rate. Instead approach the credit institution directly.