When you are in need of some extra cash, a small personal loan could be the answer. While you could go to a payday loan or cash advance loan place, banks are the best place for personal loans. However, even when you go to a bank, you have to be aware of some “tactics” that may get you in over your head. You just might be surprised at banks’ secrets to make more money.
#1 Super-Sized Loans Mean More Money
Banks are in business to make money. They are not there as good-will people there to loan us money when we need it. They are in business to make a profit. One way they make a profit is by supersizing your loan. Yes, banks have a minimum amount they will loan out so if you only want a couple hundred dollars, they are not the places to go. Additionally, you need to be careful when approaching a bank; they will try to upsell you so they can make a bigger profit. The best thing to do is to go in with a set figure to borrow and don’t borrow more, no matter how nice they make the deal sound.
#2 More Interest Means More Money
While everyone knows banks make money off the interest payments, what you may not know is how they go about doing that. Many banks will have a penalty for paying personal loans off early. They want to make sure they get every penny of interest; therefore, they do not allow you to pay it off too soon. Some will go as far as penalizing you for making payments more than five days in advance. To guard against this (or at least protect yourself), find out the policy for early and pre-payments.
#3 Lenders Have Quotas
The lender at the bank has a quota. They are expected to lend out a certain amount of money each month and year. When they meet these quotas, they get bonuses and such. Therefore, they will want to give out personal loans as much as you want to borrow the money. This makes negotiation your best friend. You have the right to negotiate terms, payment dates, interest and even schedules. The better credit you have, the more leverage you have to negotiate. After all, if you have good credit, you can always go to another bank.
#4 Automatic Withdraw Guarantees Payment
If you go to your bank and try to get a loan, then you are in good shape. You should be able to negotiate a lower interest rate by allowing them to automatically withdraw the money from your checking account, just be sure you have the money each month.