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Why You Should Always Review Your Loan Options With an Expert — Even if You Think You Don’t Need the Money

By: David Halverson October 3, 2022

One of the cornerstones of financial planning is that you shouldn’t take on debt that you don’t need. After all, loans may have fees and always charge interest, so why should you even think of taking one out if you’ve already got the money you need? There are actually numerous reasons why you should always be exploring financing options, whether you run a 100-employee small business or simply manage your own personal finances. Here’s a look at why you should be in regular contact with a reliable loan specialist and why sometimes taking out a new loan will actually save you money or provide you with additional benefits in the long run.

You May Find a Lower Rate

Even if you don’t plan on taking out a new loan, it always pays to check rates. If you can save just 1% on a $100,000 loan, for example, you’ll cut your annual interest costs by a whopping $1,000. The biggest savings usually come from large business loans and home mortgages, but even if you’ve just got a small $8,000 personal loan, you might still save $80 per year or more – enough to go out to a nice dinner or give someone a nice birthday gift. Better yet, you can deposit that money into your savings and retirement accounts, where it could turn into hundreds of extra dollars down the road.

You May Lock in a Fixed Loan in a Rising-Rate Environment

Just a few months ago, in early 2022, adjustable-rate loans were gaining popularity as interest rates seemed to be rising too far, too fast. But as of late September 2022, rates have already popped dramatically higher, and those facing adjustable-rate increases are likely suffering. In a rising-rate environment, it usually pays to swap from adjustable-rate loans to fixed-rate ones, to avoid this very problem. Whether or not rates will continue to rise, of course, is an uncertainty, but a reliable loan specialist can advise you of your options and provide you with an analysis and review of current market conditions. As of September 2022, for example, it appears clear that the Fed is going to continue to raise rates into 2023. However, a loan specialist can suggest the types of products that can best take advantage of current conditions and help you save as much money as possible on your debt portfolio.

Or, You May Find an Adjustable-Rate Is a Better Option

While it seems like interest rates are going to continue going higher into 2023, there are plenty of times when an adjustable-rate loan may actually be the best option. Usually, this is in an environment when rates are likely to fall, but this is not always the case. Imagine a scenario, for example, in which you only need to borrow money for a relatively short period of time, such as a few years. Many adjustable-rate loans will offer you an introductory rate that is lower than you can get from fixed-loan options but that also protects you from adjustments for the first five years, for example. In this case, you won’t be subjected to any upward market risk for at least that first five year period, but you’ll still benefit from lower rates on your loan. You’ll just have to be sure that you get out of the loan before the adjustment period ends. For this type of aggressive interest-rate strategy, be sure to work with an expert who can advise you of the risks and requirements of such a plan.

You May Reap the Rewards of a Credit Card Strategy

Credit cards are often overlooked as part of a financing strategy because they have the reputation of having high interest rates. Certainly, if you plan on carrying a loan balance for any period of time, using credit cards is an option of last resort, as interest rates do often trend into the high double digits. But properly used, credit cards can actually be an invaluable part of an overall debt/rewards portfolio.

 

For starters, most credit cards these days offer huge rewards. Just for signing up for a card and meeting the minimum spending requirements, for example, you may receive points or miles worth thousands of dollars. Most rewards cards also offer numerous additional benefits, from travel and baggage insurance to car rental protection, cell phone insurance and additional points or miles for spending in certain categories or at certain merchants. Travel cards can toss in extras like airport lounge access, elite status and/or Global Entry or TSA PreCheck credits.

 

In terms of financing, credit cards can offer a great option for those in short-term need of funds in the form of 0% introductory offers. Many cards will allow you to make charges of balance transfers at 0% for 12 months, while some extend that to 18 or even 20 months. If you’re absolutely certain you can repay this money in the given time period, you can save lots of money leveraging the benefits of a credit card.

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