Do you want a good rate for your loan or credit card but whenever you apply you seem to be offered a lower rate? Here we discuss the reasons that may be the case.
What is the issue?
Q: I saw a great, low-interest rate in an advertisement. However, when I tried to get the deal, they wouldn’t give me the low rate. Why can’t I get the advertised interest rate?
A: Whether it’s a home loan or a car lease, the advertised interest rates aren’t guaranteed. There are several factors that can affect the actual rate you receive.
What may be causing the change in rates?
Read the fine print. Although it’s tempting to skip over the fine print, there may be multiple restrictions and guidelines in that fine print that affect your ability to obtain the advertised interest rate.
Check your credit score. Lenders will check your credit score. If your credit score is low, you’ll end up with a higher interest rate than the one advertised.
Consider your debt to income ratio. Do you have a lot of debt compared to your monthly income?
Even if you are up to date on all payments, the total amount of debt you carry can affect the interest rate you receive.
A high debt to income ratio makes you a bigger risk to a lender, so they charge a higher rate.
Check for limited time offers. The advertised interest rates have expiration dates. Avoid missing the deadline to apply.
An advertised interest rate isn’t a promise
Each promotion will always have guidelines that determine the interest rate you’ll actually receive. Read the fine print or call the company running the promotion before making your purchase so you’ll be well informed about what to expect and can make a thoughtful decision regarding the purchase ahead of time.
