The news cycle in most of 2022, especially the latter half, seemed to really revolve around the crazy rates of inflation that we saw all across the world. A lot of the time, it’s easy to forget that the global economy is heavily dependent upon all nations, even if there are a select few that seem to dominate most of the scene. As we’re entering 2023, and now that a month has passed, it seems like not much has changed on this front.
Inflation remains a huge problem, and leaders across the world are working to mitigate the issue. Wondering how this plays into the topic of today’s article (which is, in case you’re not overly familiar with Norwegian, loans with low interest rates)? Well, if you didn’t know, the rates of interest that are charged are dependent on external factors as well as some like the borrower’s credit score and history.
You can read articles like this one, https://www.nytimes.com/2023/01/23/business/economy/inflation-turning-point.html, which demonstrate some of this trend that I’ve mentioned. While it might not seem like the biggest deal to follow the news about this stuff, if you’re in the market for a loan (or looking to refinance one that you’ve currently got), it may not be a bad idea. Honestly, I’m the first one to admit that I don’t really enjoy reading about finance and economics, but it’s been invaluable in my process of planning out loans.
Why is that? Well, I’ll be diving into some of the specifics in the rest of this article, so stay tuned if that’s appealing for you. We might not think about it much, but you’d be surprised how much planning is required when you’re looking to borrow money efficiently.
The Link Between Interest and Inflation
Until now, I’ve just sort of been hinting at the fact that these two concepts are intrinsically linked. Naturally, they are – but the way it works is kind of confusing. First thing’s first – it’s important to establish that they tend to go in the “same direction.”
What do I mean by that? Well, when inflation rates get higher, that means interest ones do too. So, during times of high inflation, most borrowers tend to steer clear of taking out new loans or refinancing their old ones. That’s pretty easy to get a grasp of.
What throws a bit of a wrench in things, though, is the fact that sometimes interest rates are employed by the banks and the federal governments across the world to sort of control inflation. Unfortunately, this has varying levels of success, and can even end up hurting the economy even more.
Basically, what I’m trying to say here is that if you haven’t been including keeping an eye on the news surrounding these rates as you plan for making a credit agreement, you may want to add that onto your routine. While it can be a bit of a pain, it can help you decide on a time to start borrowing at the very least.
Why it Matters
If you’re wondering why I’m making such a big deal about this in the first place, I can’t blame you. It certainly does seem strange to harp on it so much, but it’s because at the end of the day, the interest rate on your credit agreements are a huge deal. They’ll have a big impact on what you end up spending throughout the years, after all.
When you’re creating a budget, what are the things that you take into consideration? Most likely, you’re thinking about the interest rate on any current credit agreements that you’ve got open (if you have any). That can make a big difference from month to month in regard to how much you’ll owe on the statement.
Admittedly, this is most apparent for things like credit cards, in which your monthly bill can turn out to be quite fluid compared to something like the ones for a student loan or even a private loan. You may also notice that the percentage that you’re being charged changes as well – that will have a lot to do with the current state of inflation rates and the economy in your country rather than your credit score changing. Just something to keep in mind.
On paper, a lot of these concepts don’t seem like something that we need to be paying attention to. However, once we delve beyond some of the technical jargon and the likes, we can start to understand just how valuable this knowledge can be. Not to sound like a broken record or anything, but if you want to get the med lav rente, you’ll probably want to keep an eye on your local news cycle.
What Your Personal Credit History Brings to the Table
I’ve spent a whole lot of time here today talking about the external factors involved in getting low interest rates on your loans (usually private ones). However, it’s also important to understand that your own borrowing history is going to play a big role here as well. If you’re not already familiar with your credit score, I would highly recommend that you figure out what it is.
Thankfully, there are tons of ways to do that, and more seem to be cropping up every day. It’s not like the major credit bureaus are looking to hide this information, after all, especially since it’s such a big deal when folks are looking to get loans. Once you’ve got it, there’s a few other things to keep in mind as well.
The numbers range from “poor” to “excellent” when lenders look at them. Obviously, the lower your score, the less likely you are to be approved. In addition to that, though, if you do get approved, you’ll probably have a much higher interest rate to deal with than someone who has a higher score. That’s just a part of this, unfortunately, even if it doesn’t seem overly fair on the surface.
At least when you go in knowing what to expect, though, you can somewhat plan around that. One of the ways that folks go about improving their credit scores is by taking out smaller loans and making all of their repayments on time. While the high interest rate can be frustrating, there, it’s important to just deal with it for awhile so that you can raise your score.
Of course, it’s not completely impossible to find lower rates even if your credit history isn’t stellar. Certain lenders will be willing to work with you anyway. My recommendation in terms of finding them is to not limit yourself to just the ones in your neighborhood. Looking externally, and even internationally sometimes, can really broaden your horizons when it comes to lending.
Most of us are probably going to try to aim for the lowest possible interest rate that we possible can, seeing as that will mean that the loan costs us less in the long-term. Achieving the goal is a lot harder than setting it, unfortunately. Finding those special lenders isn’t always an easy task, although hopefully some of the resources that I’ve offered will be of some use.
Just remember that search engines are your friend, here. If you search some key words like “low interest rate loans” or something akin to that, you’ll probably find what you’re looking for. Unfortunately, you’ll probably have to comb through a ton of links that aren’t really taking you to places that offer that – you know, the sites that are paying to boost themselves in searches even if they aren’t overly relevant.
The purpose of this all is to save the consumer money. I just want to reiterate that because I’m aware that a lot of this process might seem super over-complicated and even overwhelming to an extent. Trust me, though, if you’re able to push through and do it, you’ll be thankful that you did.
All of the time spent doing your research will pay off when you have lower bills each month during your loan repayment period thanks to that lower interest rate that you were able to score. As you go through the process, just think about that, and make sure to keep your eye on the prize. While it can be easy to get distracted by all of the advertisements and flashy sites, sometimes simplicity is where it’s at.
