How to Compare Loans Online

Pay less over the long term by securing a good deal on your loan.

People interested in securing a new loan or refinancing an existing loan should shop around. Securing the lowest interest rate will provide significant savings over the course of the loan. It's also important to compare loans to find the lowest fees. Two loans offering the same interest rate can be differentiated by the lender who offers the most attractive fee structure. Comparing loans online will allow you to find the best product for your situation.

Instructions

1. Learn your credit score. Interest rates vary, based on your credit score. Companies like Annual Credit Report allow you to view a credit report and credit scores. After entering personal information online, you will get access to credit history and scores instantly. A credit report is free each year. However, a credit score will cost you several dollars for each credit bureau. This can all be accomplished through Annual Credit Report's website, which is run by the credit bureaus.

2. Research loan interest rates. Several types of financial institutions offer loans, including credit unions, saving and loans and banks. Shop all loans through comparison tools. Yahoo Loans and Bankrate.com allow you to compare loans across the nation.

3. Choose the product with the lowest fees. Lenders usually advertise the best interest rate on a loan. Some of these rates, however, have conditions. For example, an advertised mortgage interest rate may include buying down points. You have to pay a fee to secure the advertised interest rate. Or, the rate is an introductory offer, good for a set period of time. Look for the information in the disclosure or call the lender with questions.

4. Read the fine print for prepayment penalties. Some lenders charge a fee for refinancing or paying off a loan before the term has expired. This fee can be hundreds of dollars. Read the disclosure information on the online advertisement or contact the company directly to inquire.

Tips & Warnings

• Enter your credit rating when using comparison tools, such as Bankrate.com. This will narrow results based on credit score and provide a more accurate snapshot of interest rates.

• Don't forget to negotiate loan fees. Some lenders will negotiate fees handled in-house, such as application fees. Ask the lender to waive the costs. At a minimum, the company might reduce fees.

References

• The Federal Reserve: Looking for the Best Mortgage
• Annual Credit Report: Find Credit Report

Resources

• Yahoo: Loan Rates
• Bank Rate: Find Interest Rates