Getting a loan isn’t always a bad thing- it’s a chance to afford things you wouldn’t be able to have otherwise for instance. Still, high-interest rates can make even the most helpful loan a burden.
If you’re looking to lower your interest rates, here are four tips that can help you out.
Negotiate With Your Lender
You don’t have to accept the first rate that your lender offers you. It’s in your best interest to try to negotiate for a lower rate. Your lender may be open to this, and it doesn’t hurt to simply start discussions for a negotiation.
But how do you negotiate? Luckily negotiating is a skill that can be learned.
For instance, one tip is to think about why you need the loan as this can be a powerful motivator during a negotiation. Do you need it to pay for assisted living facilities for your parents? Is it for your child’s school tuition? Or, another good negotiation tactic is to ask for trade-offs. For example, you can try asking for a lower rate in exchange for a longer loan tenure.
Consider a Different Type of Loan
Some loans have lower interest rates than others, and if the loan you’re applying for is on the high side, consider another type.
For example, secured loans have lower interest rates than unsecured ones because the lender has collateral. So if you own a home, you can get a home equity loan. The value of your home secures the loan, so you’ll likely get a lower interest rate than someone who’s not putting up their house as collateral.
You also want to look into government-backed loans as they have considerably lower rates.
Look Into Refinancing
Refinancing is taking out a new loan to replace an existing one. If you’re struggling with high-interest rates, refinancing could be a good option for you.
Plus, refinancing helps you in two ways- not only can it get you a lower interest rate, but it can also extend the length of your loan which would reduce your monthly payments.
However, keep in mind that this could also mean more interest payments in the long run.
Get a Co-signer
The higher your credit score is, the more lenders are likely to give you a lower interest rate.
If your score isn’t where you want it to be and you don’t think you can improve it in time for when you need the loan, look into getting a cosigner. A cosigner is someone with good credit who agrees to take joint responsibility for the loan with you.
Having a co-signer will likely get you a lower interest rate than you would otherwise have gotten if you have bad credit.
Getting a loan you apply for is important, but it’s not as simple as applying and getting approved. Make sure to do your research and get the lowest interest rate possible, as a high-interest rate often means trouble.