If you’re in the process of getting a personal loan, you definitely want to find one with a lower interest rate, but how can you do that? There are plenty of ways to increase your chances, including taking advantage of these four major tips.
Tip #1: Shop Around
Although you may receive a personal loan offer from your bank, that doesn’t mean it’s necessarily the best option for your bank account. Shopping around and getting different offers from different banks can help you find the lowest interest rate. This also allows you to compare fees and other terms that may differ from bank to bank.
You also shouldn’t rule out credit unions. They return profits to members in the way of lower interest rates among other benefits. You will have to become a member though to be eligible to receive a loan from them.
Tip #2: Find a Co-Signer
Working with a co-signer can also help you find a lower interest rate. This is especially the case if they have a higher credit score or income than you. However, it’s essential that your co-signer and you understand the agreement – your co-signer will be on the hook to pay the loan off if you stop paying. It will also show up on their own credit report.
Tip #3: Increase Your Credit Score
Increasing your credit score can be an excellent way to also get a lower interest rate, but sometimes this is easier said than done. To work on your own score, you should always be working to pay your bills on time and getting a credit report to see exactly what you can work on. These reports will detail why your score is what it is and give tips to increase it.
You should also be working to pay off debt. This includes overdue debt as well as debt that is affecting your debt-to-income ratio. A high DTI could result in a high-interest rate on a personal loan. Paying it down to a more acceptable level will help you increase your credit score.
Tip #4: Take Advantage of Programs Offered
Sometimes, lenders will also offer you programs along with your personal loan that can lower your interest rate. Autopay is an excellent example of this. By allowing the lender to automatically take the money due on a certain date each month, you can receive a discount on your interest rate. It’s usually only around .25% but it adds up.
Your lender may also offer you benefits for being a part of their bank or credit union and allow you to wave any loan fees, including the origination fee. Some banks, including Citizens Bank, don’t charge an origination fee at all.
Getting a Personal Loan with Low Interest
It’s important to not simply take the first personal loan offered to you. Research is essential to finding the lowest interest rate you qualify for. Time spent now comparing your offers will most likely save you quite a bit of money in the long run.