Let’s say you are looking to buy something big, something like a car, home, or even a vacation home or RV. Naturally, you see today’s low interest rates and think that now is as good as a time as any to take out a loan for your new purchase.
Banks want to lend you money, but they want to see that you can pay it back. When you’re looking to buy a new home, car, or RV – something really expensive – with someone else’s money, you should always be careful not to:
1) Get stuck on one bank – Never get stuck on one bank and always shop around for the lowest rates before signing a commitment. Banking is a commodity, and it is just the reality that some banks have lower rates than others.
2) Apply for multiple loans – Don’t apply for any other kind of loan bigger than a credit card before you complete one loan. Lenders start to get concerned when a new borrower who has bought a car in the last few months suddenly wants to buy a home. Always complete one big loan before starting another, and never ever try to do two at the same time from the same bank.
3) Reduce your savings balances – More lenders want to see your full financial history, which often includes savings, checking accounts, and even retirement investments when you buy something like a home. Before you apply, try to show that in the last few months your savings and investments have gone up in value, not down. A positive trajectory is a great selling point for a lower interest rate.
Getting a loan is more common sense than rocket science. If you follow the guide above, you’ll be well on your way to getting any loan you may need at the lowest possible interest rate.