It is always a good thing for borrowers when banks offer low interest rates. This means that there is a lower cost of borrowing which is beneficial to borrowers. However, most of the time, rates are pretty much standard. This is because banks are regulated by a central bank so they can only offer interest rates that are within the range prescribed. We do want to get the lower end of that spectrum though.
So when do banks offer lower interest rates?
They can offer lower interest when:
- You have a good track record or rating. There are loans when banks can have the discretion to set interest rates. Of course there is a range at which the bank would base the rate on. Having a good credit rating can let you avail of the lower interest rate. This is because you are then classified as one of the less risky loans.
- You have collateral. Secured loans can get you lower interest rates. This is because the bank will have security that in case you default on your loan, they can always foreclose your property. Of course, both you and the bank wouldn’t want that to happen so you would endeavour to meet your payments regularly.
- They want to refinance your loan. Refinancing usually happens with a third, separate party. Another bank would want give you a forbrukslån på dagen because they may want to get more clients. Refinancing old loans is more suitable to a lot of banks because they do not have to run background checks and other pre-loan requirements that is needed to ensure that the borrower can pay. So in order to convince you to get a forbrukslån på dagen, they will offer sweet deals like lower interest rates and shorter term for loans. Otherwise, if they do not do so, they will not be able to convince you to refinance your loan.
- They are expanding. When a bank is expanding, it means that they do need money and in fact have money to spare. That’s why they need to grow bigger in order to make use of all the excess money. In order to encourage potential clients for their expansion, they will offer very competitive interest rates in order for them to get more clients and revenues.
- The Central Bank lowers the interest rate requirement. This is usually an expansionary measure that monetary board will take when they want to encourage people to invest rather than to save. So they give incentives to banks to encourage them to lower their interest rates and encourage people to borrow money. Also, when this happens, rates for savings will also go down. As such, people would not be encouraged to save but rather spend money.
Although banks would more or less have standard interest rates, you can get better deals from some banks. You can scout or canvas for interest rates offered by different banks though. Even a very small margin of difference among interest rates could have a substantial impact on the total amount of payments that you make. So it is always good to be on a lookout for the times when banks would offer lower interest rates because that is the best time to borrow money.