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4 Tactics To Lowering Interest Rate
Your credit status, income, payment term, etc., are just a few important aspects that may affect the interest rates on your loans. Gladly, there are tricks to achieve a lesser interest rate on loans.
Here Are Some Guidelines for Lowering Your Interest Rate
1. Review your choices
Depending on your credit score, you may have different loan options. Here are a few that you may want to consider.
Short payment terms. Paying your loan as quickly as possible will lower your interest rate. However, this also means higher monthly fees. If you are interested in this option, it is best to make sure that you are capable of paying the due monthly fees on time. Late payments can damage your credit reputation and lower your credit score. The creditor may also charge extra fees for late payments. Another bad effect of not paying the loan on time is being transferred to a collection agency which will make it harder for you to negotiate the interest rate and payment terms.
Take a single loan to pay off all your loans. This is applicable if you have multiple loans. Paying for multiple ...
... loans also means paying for multiple interest rates. So, it is best to cut it down to one.
Check the interest rates of different types of loans. Different types of loans have different interest rates. Some are relatively higher than others. For instance, if you are paying medical bills, you may want to take out a personal loan instead of using your credit card. This is because most cards charge higher interest rates than personal loans.
2. Check your current credit score
It's a good practice to always check your current credit score before taking out a loan. Why? Because your credit records and credit scores are the first two things that credit issuers check to approve a loan. They are also the basis to determine the interest rate on your loan. Do not apply for a loan without checking your credit score first even if you have no late payment history in your memory. One of the most common mistakes found in credit reports is late payments due to creditors not updating the account. Other common errors that can damage credit scores are loans that do not belong to the account. This happens when someone used your credentials to take out loans or identity theft.
If you have bad credit or have less than a 600 score, you may either be declined on your loan application or charge with a high-interest rate. It is helpful to repair your credit before applying for loans.
3. Ask for a lower APR with the lender
Do not hesitate to negotiate for a lower interest rate when taking out a loan. Some lenders may agree with it, especially if you have a good credit score or have been their customer for quite some time. Creditors earn money by providing credit, they wouldn't want to lose a customer.
4. Get a co-signer who has a good credit score
Your loan may be declined or charged with a high-interest rate if you have bad credit. Consider asking someone to co-sign for you. Having a co-signer on a loan is helpful to get a lower interest rate as lenders see it as a lower risk. Furthermore, if you are getting a personal loan, some lenders will allow you to fuse your credit score with your co-signer’s score to come up with a higher total score. Many lenders may also allow you to co-sign with an average or poor credit score for a higher interest rate. If you have a poor credit score, try asking a family member or a friend with a better credit score to co-sign for you. They might be willing to do this especially if they are also planning to take out a loan to have a lower interest rate.
Creditors will check credit reports and credit scores to decide on the interest rate or whether it's worth approving a loan. It’s crucial to keep a high credit score for a better interest rate and more loan selections. You can repair your credit by doing it yourself which would be easier with the use of credit repair software or by asking a credit repair service to repair your credit.
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.
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