List 3 steps you can take to lower the overall cost of borrowing money. Explain how...

List 3 steps you can take to lower the overall cost of borrowing money. Explain how each step can save you money.

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Expert Solution

Steps to lower overall cost of borrowing money is stated below:-

1) Selection of Lender

one should select the lender wisely. Thoroughly analyse the available lenders and rates at which loans are offered by them. At the end, select the lender who is charging lowest rate of interest.

2) Duration of loan

The duration for which loan is taken also affects the cost of borrowing. Larger the duration, lower will be the monthly installment and thus the cost will also be low.

3) Advance Repayment

The concept is simple, "The earlier you repay the loan- the less interest you have to pay on Principal amount borrowed"

4) Negotiation

The deal to take loan should be properly negotiated. A good negotiator can get the loan rates reduced to levels lower than those which are offered to general public

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