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Low interest rate on a loan: While deciding how much interest you will be charged, lenders consider several factors.
How Can I Get a Lower Interest Rate On a Loan?
This factors, including the amount you have applied for, for how long, your repayment capacity, your creditworthiness and credit profile. If you do not want to face sky-high interest rates, there are several options you may want to consider before applying for a loan.
Maintain a Good Credit Score
Your credit score should be at least 750, if you want to get the best deal for a loan. Having a good credit score not only helps you to be found eligible for a loan but also lowers the interest rate you will be charged. There are several factors affecting your credit score including your payment history, credit utilization rate, total debt, bankruptcy, how many accounts you have and number of inquiries for your credit report, etc. But, no worries; there are several ways to improve your poor credit score:
- Check your credit report to correct possible mistakes.
- Avoid late payments and defaults.
- Pay off your existing debts on time and in full.
- Keep your utilization rate low.
- Pay off overdue bills.
- Do not apply for a new credit card or loan.
Maintain a Good Repayment History
You need to pay off you credit card bills and other monthly repayments on time and in full to prove the lender you have a high repayment capacity. The better your repayment history seems, the more chance you will have to negotiate on interest rates with the loan issuer.
Shop Around To Find The Best Deal
Before applying for a loan, you should shop around, compare and choose amount different lenders. Different terms to find the most suitable deal for your budget. You can use online loan calculators to find out how much interest you will be charged. Additionally customers can visit an online financial marketplace to see various offers. Also, borrowing from the bank you are already working with may lead you to be offered special offers and options.
Apply For a Secured Loan
Applying for a secured loan, helps you to be offered much lower interest rates since that type of loan requires you to pledge an asset to reduce risk for the lender. But, lender will have a right to take possession of your property if you fail to complete your repayments.
Find a Co-Signer
You may ask someone who has a better credit report to act out as a co-signer to reduce the risk fort he lender and be offered lower interest rates.