Low-interest loans are very rare to come by nowadays. Even a few basis points of difference can be alluring and blind you from other loan characteristics and terms that might be disadvantageous to your situation. Nevertheless, there is such a thing as loans that won’t bleed your finances dry every month due to high-interest rates. Below are 5 tips to help you get low-interest loans.
Determine Your Credit Score
You don’t even have to leave your house. Check your credit score through any one of the three major credit bureau’s websites including TransUnion, Experian, and Equifax. You can request a free credit report every year. Keep in mind that you never need to pay for a report. There are several means to get it free of charge, the best of which is through one of the credit bureaus listed above. All you’ll need to provide is basic information about yourself.
Evaluate Your Risk Profile
Using the credit score you’ve obtained, evaluate how lenders/banks will see you, risk-wise. Basically, credit scores will range from 300 to 850. Obviously, the higher your credit score, the less risk you pose from the perspective of lenders. A score of at least 700 is generally perceived as the ideal score. However, it’s also common for some lenders to grade you as “creditworthy” if you have a score of 650 to 680. For those with less than 650, it’ll be more difficult, but still entirely possible, to secure a loan. A drawback is that you get higher interest rates on the loan.
Fix Spending Habits
Bad credit is a sign that you have difficulty or is negligible when it comes to making financial decisions. Not paying debt on time, whether it’s credit cards or utility bills, can get you in a lot of trouble. The effects are often asymptomatic hence people don’t realize it until they’re in a bank or car dealership being rejected for a loan application or, worse, being offered with ridiculously high-interest rates. To be able to affect long-term improvements, target spending habits that are becoming a financial detriment and aim to resolve them asap.
Shop Multiple Loans
Don’t just go for the first lender you encounter on the market. Look online and request for multiple quotes or visit lender offices and dealerships for in-person quotes. Don’t show emotion when shopping for financing options. Showing that you are actually ready to leap into a new car, house, or personal loan will earn you less space to bargain your interest rates. Tell prospects you’re only browsing for loans and that you’ll be visiting other lenders. Even if you don’t get lower rates, you’ll be surprised how many perks you can squeeze from your lender, such as cashback.
Don’t Be Afraid to Experiment
Personal loans from sources, such as Earnest and Lending Club, may have slightly better offers on the table if you’re willing to browse on their sites. The majority of the loans here will have higher rates, but there’s oftentimes low-interest deals that you can capitalize on.
There’s no magic to getting low-interest loans. The trick to remember is to be a financially responsible and conscious individual. Always aim to improve your credit score and make decisions that protect your score from damage, such as signing up for too many credit cards or mortgages than what you can handle.