“Secure a cheap loan now at super conditions!” – many lenders are currently using this or a similar slogan to advertise loans with low interest rates. In fact, lending rates are as low as they have been for a long time. But be careful: the advertising is geared towards an ideal borrower. This means that a prospect can get a loan at advertised conditions, which corresponds to the ideal image of the banks.
It is often a person who is in a regular employment relationship and has no further financial burdens, i.e. has a good credit rating, takes out the loan in a certain amount and for a certain time. If one of the characteristics does not match, it is a reason for changing the condition. The following criteria are the reasons for an interest rate hike:
- Longer timeframes than advertised by the bank;
- Age of the potential borrower (too young or too old often means a higher risk for credit institutions, which automatically means higher interest rates);
- Reason for financing (construction financing is always cheaper than consumer financing) or type of interest (for example, agreeing fixed interest for a longer period often means paying a higher interest premium).
Have margin of interest
But if you don’t fit into the ideal picture of a borrower, there is no reason to give up and accept the higher costs immediately. What not many people know is that large banks in particular have a margin of interest. Try to negotiate, especially if you have good arguments. Such arguments could be a better position or an early raise.
But getting alternative proposals from competitors often leads lenders to offer lower interest rates to potential borrowers.
Conclusion: If, in the eyes of your lender, you are not an ideal borrower, be it because of the desired long loan term or desired fixed interest rate, there is still no reason to immediately accept an offer from the banks on higher terms.
Do not blindly accept the first offer, negotiate confidently, ideally using the above arguments, and you have a good chance of getting the loan on the terms you want. Persistence counts – even a few percentage points can save several thousand euros over the years.