While the market focus is, understandably, on fluctuating interest rates, there’s actually much more to your business loan, as Credabl’s Ali Gardner explains.
In the rapidly changing interest rate environment that we are currently living in, Credabl’s Ali Gardner encourages you to dig a little deeper into what you really want from your loan. Now, more than ever, it is vital to consider what is important to you over the longer term.
Ms Gardner says some of the most common things she hears when she speaks to her clients about their loans are, “What’s the interest rate?” and, “I’m just chasing the lowest rate”.
But now interest rates are changing from one day to the next, and it doesn’t look like that’s going to be slowing down any time soon. So, if you are just after the lowest interest rate, it’s likely that the lender you choose now may not be the cheapest in a few months’ time.
That’s why, Ms Gardner says, it’s so important to consider other components of your loan.
Just because the interest looks cheap, doesn’t mean it’s necessarily the most cost-effective option
Ongoing Fees
Sure, the rate might look cheap, but if you’re paying an annual or quarterly fee, then what is the real cost to you?
Lender Service
There’s nothing worse than sitting on hold to a call centre for hours to ask a question about your loan. Or waiting for days on end to receive an updated loan statement. So maybe having your own dedicated relationship manager to look after all of this for you could be worth its weight in gold.
Loan Structure
Just because the interest looks cheap, doesn’t mean it’s necessarily the most cost-effective option. A home loan without an offset account may mean that you are paying more interest over the life of the loan. Or a commercial loan with a shorter term may mean that you end up with larger monthly repayments, which impact your business cashflow.
Your Future Plans
It’s important to consider planned lifestyle changes. For example, if you know you are planning to sell your property or business within the next year, opting for a two-year fixed interest rate could be costly to you. Even if the rate on offer is the lowest option at the time, you might be up for break costs and early repayment fees.
Another example could be if you are planning to take extended leave (going back to study or having a baby, for example) and so having stability over your repayments while your income is going to reduce will be important to you.
In this scenario, choosing a fixed rate so that you have a set rate and repayment while your income is going to vary might be more suitable to you than taking a variable rate loan. Although the variable rate might be the lowest on offer at the time, you have to consider how much the rate might fluctuate. Could you afford the higher repayments moving forward?
So, as you can see, there really is a lot more to consider when choosing a loan than just the interest rate.
Ms Gardner says the team at Credabl has access to a variety of different options and pride itself on finding the best solution for your individual circumstances.
Contact Credabl
Ali is a Residential Lending Specialist at Credabl in Western Australia available on (08) 6280 1255. Or chat live to a Credabl consultant via the company website: credabl.com.au.
