Before we start discussing how to get lower interest rates on personal loans, it’s important to understand what they are. Below are their 5 key characteristics:
(1) they are unsecured, which means you don’t need collateral to get the loan;
(2) due to a lack of collateral, they usually result in higher interest rates;
(3) Lenders only give you this loan “believing” that you would pay back the money in full and with interest;
(4) You must have excellent credit to even be considered for them;
(5) Due to the above points, it is very difficult to get personal loans unless you have excellent credit history. Even if you have excellent credit, it is very difficult to get approved at really low interest rates.
Despite this, you can still borrow money from lenders. Now let’s look at how these 4 handy tips can help you get better personal loan rates.
1. Increase your credit score.
The best way to lower the interest rates on these types of loans that you get from banks and other financial institutions is to improve your credit score. This makes you a good risk in the eyes of the lenders as your excellent credit tells them that you would pay the money back. So how do you increase your credit score? Make your payments on time, do not open new accounts and pay off your debts as much as possible.
2. Ask lenders to lower interest rates.
If you’ve improved your credit score, consider asking your lender to lower your interest rates. It is difficult for this to happen, but it is possible. Banks can lower interest rates on your existing loans. It may not be a lot, but it will save you a lot of money over the life of the loan.
3. Consider refinancing existing loans.
If you improve your score, reapply for a loan with lower interest rates. Check the current national interest rate on loans. If it’s lower compared to the interest rate your current loan is at, refinancing may be a good choice. Use the excess money to pay off the old loan.
4. Consider getting a secured loan.
This could be possible if you own a home and there is equity in the home. Another way to get a secured loan is to use your car title to get a secured car title loan. You can also secure the loan based on your assets that banks would accept e.g. B. Jewelry. If you already have an existing high-interest personal loan, a secured loan at a lower interest rate will help you pay off the old loan.
These are the steps that many people including myself have taken in the past to get this type of loan at really good interest rates. I believe by following these steps you can also get personal loans at convenient interest rates that you can manage.