Shopping around for a loan can save you money.

Shopping around for a loan improves your chances of saving money. Different lenders offer different products, so comparison shopping helps you find the best loan deals around.

There are several things to look for when comparing loans from different lenders. You are not just comparing interest rates. It is far more involved than that. Consider the following factors that can affect your loan.

Shopping around for a loan can save you money.

Shopping around for a loan improves your chances of saving money. Different lenders offer different products, so comparison shopping helps you find the best loan deals around.

There are several things to look for when comparing loans from different lenders. You are not just comparing interest rates. It is far more involved than that. Consider the following factors that can affect your loan.

• Type of loan. First, consider what type of loan you need. Do you need a car loan, personal loan to consolidate debt, a home equity loan, or a home mortgage? This affects which lender you look at. Just because you already have a mortgage with a lender does not necessarily mean that you should go to that lender for a car loan. In fact, it may not even offer car loans. Investigate who is well-known for providing loans for the type of loan you need and get several offers from those lenders.
• Pre-approval. This is the best way to shop around for a loan no matter what type of loan you're looking for. Contact several lenders to get pre-approved. You provide your basic financial information -- income, assets, debt -- and the lender estimates how much of a loan they can provide to you. Because this is not a formal loan application, you can get pre-approved by several lenders and compare the loan products they offer.
• Fees. Interest rates may not vary that much between lenders, but fees do. When shopping for a loan, get a written estimate of all the fees you are expected to pay from each lender you are considering. Question any that you do not understand. Some lenders may even waive the fees for you.
• Your circumstances. Certain lenders specialize in specific customers. If you have bad credit or a small down payment, any lender may not work well for you. Instead, shop around and find a lender that specializes in loans for your situation.
• Customer service. You may find a great rate with no fees, but if the lender cannot close the deal, you have not saved any money. Make sure whatever lender you choose for your loan has a good reputation for follow-through and good customer service.

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Submit a loan request

Feeling overwhelmed by all the money you owe? Follow our seven simple steps and dig your way out of debt.

Gaining control of the urge to splurge is the first part of digging your way out of debt. The second is taking advantage of ways to lower high-priced interest expenses, such as credit cards, that you may have accumulated over time.

Feeling overwhelmed by all the money you owe? Follow our seven simple steps and dig your way out of debt.

"Beware of little expenses; a small leak will sink a great ship."
-Benjamin Franklin

Gaining control of the urge to splurge is the first part of digging your way out of debt. The second is taking advantage of ways to lower high-priced interest expenses, such as credit cards, that you may have accumulated over time.

These seven steps can help reduce your debt load:

• Start today. According to the Cambridge Consumer Credit Index, paying off debt in 2005 is the number one priority for 25 percent of Americans. However, LendingTree's 2004 Smart Borrower Survey found 63 percent of those moderately to extremely concerned about their overall level of debt, do not have a financial plan to get rid of it. Procrastination does not pay the bills.
• Begin tracking your expenditures. By keeping a close eye on your purchases, you can determine which are needs versus which are wants. You can then formulate an action plan to reduce unnecessary expenditures and free up money to pay down debt.
• Set spending priorities. Make sure you spend to serve your life goals instead of just paying off expenses as they occur. Set aside money first for debt repayment and then budget for things such as saving for college or retirement, before spending on discretionary items.
• Leave your credit card at home. Surveys done by Consolidated Credit Counseling Services indicate consumers are likely to spend more using a credit card than when paying in cash. Also, closing credit card accounts can help you resist the desire to overspend by restricting your credit limit.
• Consider a debt consolidation loan. You can benefit from lower interest payments if you transfer the balances from high-interest credit cards to a lower-interest loan such as a home equity loan or home equity line of credit.
• Pay more than the minimum payment on your loans. A 2004 Cambridge Consumer Credit Index survey reveals that 42 percent of Americans are making either the minimum payment, or no payment at all, on their outstanding credit card debt. Using money sitting in a savings account (that's most likely earning less than 2 percent interest) to pay off credit cards (that may carry an 18 percent interest rate) could be a far wiser investment.
• Try to negotiate a better deal with your lenders. If you're feeling overwhelmed, don't be afraid to ask your lenders if they are willing to lower their interest charges or reduce your required monthly payments to help you get back on track. This is often a better alternative for lenders than having you file for bankruptcy.

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Consolidate your debt

If the interest rate on your ARM is due to adjust soon, you should consider whether it makes sense to get a new loan.

Like many home buyers, you may have chosen an adjustable-rate mortgage because the introductory interest rate kept your monthly mortgage payments affordable during your early years of homeownership. But every adjustable-rate mortgage resets sooner or later, and when yours adjusts, you might be facing a substantially higher monthly payment.

If the interest rate on your ARM is due to adjust soon, you should consider whether it makes sense to get a new loan.

Like many home buyers, you may have chosen an adjustable-rate mortgage because the introductory interest rate kept your monthly mortgage payments affordable during your early years of homeownership. But every adjustable-rate mortgage resets sooner or later, and when yours adjusts, you might be facing a substantially higher monthly payment.

The possibility that your payment might climb even higher may prompt you to consider refinancing your adjustable-rate mortgage with a different loan product. The choice to refinance isn't easy, but there is no need to panic or overreact to a higher payment.

Factors to consider
The difference between the reset monthly payment on your existing mortgage and the amount you would pay on a new mortgage is the most obvious factor to consider, but shouldn't be the only factor you keep in mind. Other considerations might include the caps and adjustment periods on your current mortgage, the outlook for higher (or lower) interest rates, the cost to you in time and money to obtain a new mortgage, and how much longer you expect to own your home.

The caps and adjustment periods on an adjustable-rate mortgage can protect you against substantially higher payments even if interest rates continue to rise. It's difficult to predict interest rates, but you can educate yourself and pay attention to financial-market news, so you can make smarter decisions.

A new mortgage can cost thousands of dollars and take many hours to research, apply for and close. If you expect to sell your home within a few years, the benefits of a new mortgage might not justify the outlay of time and money. That's especially true if you itemize your income tax deductions since a higher mortgage payment could be partially offset by a bigger break on your taxes. (Consult a tax advisor about your situation.)

New mortgage may be advantageous
If you obtained an adjustable-rate mortgage within the past few years, your payments might not be lower on a new fixed-rate mortgage today because interest rates now are likely higher than they were when your mortgage was originated.

Moreover, if you refinanced into a new loan that wouldn't be paid off as quickly as your existing mortgage, you would have to make more payments into the future. For example, if you had made payments for five years on a 30-year ARM, you would have 25 years of payments left to make. But if you refinanced your ARM to avoid higher payments and you chose a 30-year term, you would be making payments for an additional five years. That means lower monthly payments might not be advantageous because you might need to make a lot more of them to pay off your new loan.

A new loan might offer other benefits, however. For instance, a fixed-rate mortgage would protect you against the possibility of even higher monthly payments in the future, an advantage that's especially important if you plan to own your home for a long time.

Adjustable rate can be advantageous as well
You also might want to refinance one type of adjustable-rate loan into another type of adjustable-rate loan that would reduce, but not eliminate your exposure to higher interest rates. A lender can help you figure out which products might accomplish this objective.

An adjustable-rate mortgage may offer a key benefit that's simply not a function of fixed-rate products: That is, your payments could be reset lower as well as higher as interest rates fluctuate over time. An adjustable rate is always riskier than a fixed rate, but if you can shoulder that risk, you may be rewarded with lower payments in the future.

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Refinance your mortgage