When people get loan quotes, they want to know "the bottom line," which means the answer in plain English. But the problem we all face is that it's often as painful as pulling teeth to try to figure out what the "bottom line" is.
Take, for example, the APR. On the surface, this seems like the most obvious and easiest way to figure out if lender A is likely to be cheaper than lender B. This should make it easier for us to choose, shouldn't it? Um...well, no, not really.
Lenders are starting to realise that we, as consumers, are likely to shop around for the best loan deals. They also know that the APR is one of the most important things we look at when we compare loans. But that's where the problem lies. If you've ever seen their tempting ads, you know that they put the word "typical" before the APR, which is a very important word. Well, "typical" means that they only have to make sure that the typical APR is given to two-thirds of all applicants. But if you're in the other third, what do you do? You might contact half a dozen lenders because their APRs caught your eye, only to find that the loan quotes they give you are higher than the rate they advertised.
So, depending on your credit score, you might get the APR that was advertised, you might be able to get a loan, but the APR would be much higher, or you might be turned down altogether.
So, you've been accepted into the standard APR. You've gotten all of your loan quotes and compared them to find the cheapest lender. But are you sure that they're the least expensive?
Well, have they told you about any early payoff fees you might have to pay on top of the monthly payments if you have the nerve to pay off the loan early? What about insurance that helps you pay your bills? They may insist that you get that insurance as well, just in case you can't make your payments for a short time. Have you taken that into account when giving loan quotes?
Consumers need to be very careful about the sneaky, but legal, ways that lenders will try to get you to choose them as your lender. But instead of asking for loan quote comparisons, you should start asking for the bottom line, which is the total amount you'll have to pay back over a certain period of time, how much that is each month, and if there are any clauses or conditions. By asking these questions, you can start to figure out the "mystery" of loan quotes and make sure you're getting the best deal.
