How To Get Lower Interest Rates On Any Personal Loan

by - 9/21/2017 06:06:00 PM

Loans can be a handy way of gaining some credit to finance something expensive. Most people will end up with a loan of some sort during their life. It could be a loan to buy a new family car, a loan to buy a house; you name it!

One of the problems with loans - and part of the reason they sometimes get a bad name - is interest rates. Some loans charge abnormally high-interest rates, which makes it harder to pay them off, and can cause debt.

However, you don’t have to settle for high-interest rates. In fact, there are ways you can lower the interest rates on any loan you apply for.

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Make It A Secured Loan

In the loan world you have two options; a secured loan or an unsecured one. Normally, when interest rates are high, it’s because you’ve got an unsecured loan. This means you’re getting the money and haven’t put anything you own up for security. So, the lender charges a higher rate. As mentioned on, you can get lower interest rates when the loan is secured by something like your property. Securing the loan makes it safer for the lender as they will always have something to fall back on if you don’t pay them back on time. Less risk means they can afford to give you a lower interest rate. Securing a loan is a great idea if you’re confident of paying it back and have no worries that your asset will get seized.

Improve Your Credit Score

Your credit score plays a huge role in determining your interest rate for a loan. A bad credit score indicates that you’re not a very responsible borrower. You may have made late payments in the past and are in debt. As such, the lender can’t trust you as much as someone with a good credit score. So, they reward the person with a good credit score by giving them a lower interest rate. In essence, all you have to do is improve your credit score before you apply for a loan. This is fairly easy to do, the basic concept is to just be responsible with your money.

Borrow Slightly More Than You Need

Loans are often cheaper when you borrow more. Companies offer lower interest rates when you borrow more and more money. This is mainly to entice people to borrow more, but it works out well for you. By borrowing $50 more than you need, you could save money on the overall costs thanks to a lower rate. Do the calculations beforehand, most lenders have tools on their sites to help you figure out the cost of the loan. If you can get a lower rate by borrowing more, and it costs the same/less, then go for it.

As you can see, there are a few clever tricks you can use to lower the interest rates on any loan you apply for. If you need to borrow money for a big purchase, then keep this advice in mind to make it more affordable.

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