Paying high-interest rates can make your financial situation harder. It increases loan monthly fees and the total payable amount. Good thing you can do something to lower the interest rate. Follow the tips in this article.
If there’s an emergency and you don’t have much saved up, you may think of a loan. However, depending on your credit score, income, and the length of time you’ll repay the loan, you may face paying a high-interest rate. But don’t despair, there are ways to lower it down. How?
Here are Some Tips and Tricks for Lowering Your Interest Rate
Negotiate for a lower APR with the financial institution
If you are not happy with the interest rate charged to your loan, don’t hesitate to talk to the loan officer for a better interest rate. Many financial institutions are willing to negotiate for their trustworthy customers. Negotiation can go smoothly if you have a good credit score, good records, and has been their customer for many years. If you have poor credit, lenders may require more documents or collateral to grant you a lower interest rate.
Review your options and go for the best deal
Different types of loans have different interest rates. Before taking out a loan, check which one has the best interest rate. For instance, when purchasing a car, you may want to consider taking out a personal loan to buy the car in cash than getting an auto loan in a car dealership. Car dealership interest rates can be as high as twenty-one percent, while personal loans might have interest rates as low as 5 percent.
Another good option is getting a short-term payment loan. Long-term payment loans may have lower monthly fees but they accommodate more interest. So, it is best to repay loans as fast as possible.
You may also want to consider taking out a loan to repay multiple loans. This way you’ll only have to deal with one interest rate. Unlike when you have several loans.
Improve your credit score
If you have a bad credit score, you are bound to get a high-interest rate. Or worst, be denied. Therefore, it is best to improve your score before getting a loan.
Get a co-borrower with a good credit score
As mentioned, it can be hard for you to get a loan with a bad credit score. How much more to negotiate for a lower interest rate? An effective way to cut down on interest rates is by getting a co-signer with a better credit score than you. This will make the loan less risky in the eyes of creditors and will most likely be approved with a lower interest rate.
Credit issuers will review your credit report and determine your credit score when you apply for a loan. Therefore, maintaining a good credit score is helpful to get a low-interest rate and more loan options. If you have bad credit, you can improve your credit on your own with the help of credit repair software or by hiring a credit repair service to repair it for you.
ABOUT THE AUTHOR: Lorenzo Rodriguez is the president and senior developer of Credit Money Machine, the first credit repair in the industry that is used by many professionals to extract credit reports, detect errors, and generate dispute letters automatically and 15 within seconds.