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Inflation and loan quotes

Rate of a loan depends on numerous factors, such the lender, the type of loan, and your income and credit history. Mine is less than stellar thanks to my ignorance, youthful greed, and skillful promotions. While in university, promotion agents and sales representatives, hassling students to fill out a credit card application and to receive a free gift, were a common sight.

Few lazy afternoons over the years, and plus childish desire to have a new shiny toy free of charge equaled the number of credit card application I’ve filled out, knowing that my credit history is not yet established enough to get a credit card, nor really wanting one in the first place. Much later, working at a car exhibition doing pre-approved car loan promotions for a certain brand of vehicles, I was unpleasantly surprised when I was told by a customer – no less!, about the damage credit checks cause to one’s credit rating. It was the most simultaneously embarrassing, yet enlightening moment to date.

Fortunately, for those in the know (thankfully, this group is not elite, and is always welcoming to its new members), there is no need to blindly damage one’s credit rating in order to obtain a loan quote. Taking out a loan should be similar to purchase of a vehicle – importance of the research is crucial. Most lenders offer online loan application forms, and provide typical interest rate on an average loans. Individual loan quotes, however, vary greatly. The borrower needs to be clear, correction – crystal clear – on whether an application in question is a pre-qualification form, which will provide you with a loan quote, with no obligation to accept, and no credit check at that stage, or if the form is in fact an actual loan application (read credit check, and ideally, money issued at a decent interest rate.)

The search of a perfect loan quote is a challenging undertaking at best of times. Even if the borrower knows exactly how much he or she wants to take out, and for what purpose, loan rates get slippery like eels. Generally the greater the amount the lower the interest rate, yet the desired terms of repayment, the amount of outstanding mortgage, (regardless of whether one want secured or an unsecured loan) and total family income come into play. Some do their own research, others take out loans through a broker, both ways have pros and cons; one should not however, settle for the first seemingly acceptable loan quote. There are many lenders. There are many options.

Amidst the cries of an oncoming inflation, it would be interesting to observe the rise of interest rates among different financial institutions. Ideally, far less entertaining than watching a burning house, this should be an event worth betting on. How much will the overall interest rates go up? How much will any given financial institution raise their charges? Will institution whose rates are currently considered as high maintain them, hence becoming one of the more affordable ones during and after inflation? Will the difference in rates go up proportionally to the rates presently offered? Ladies and gentleman, place your bets.

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