A Few Ways To Get A Better Interest Rate On A Personal Loan
Personal loans can be a good way to get you through a rough patch financially, to buy a vehicle from an individual seller, to pay for a vacation, or to do some remodeling on your home. When you apply for the loan, it is not important what you plan on doing with the money. When approved, you are given the cash to do with as you please. However, because there is no collateral involved, you may find these loans have a high interest rate. Before you sign the loan documentation, find out if there is a way you can get a lower rate and save yourself considerable money. Here are a few things to discuss with the lender to get a lower personal loan rate.
Shorter Loan Term
Instead of asking for a longer term to lower the monthly payments, ask for a shorter term. As long as you are sure you can afford to make the payment, you should ask for as short a term as possible. When the lender does not have to wait as long for their money, they will often lower the interest rate. Keep in mind that the shorter-term payments may not be as much as you think when the interest rate is lower.
Collateral
While personal loans generally do not require collateral, you can ask to get a secured personal loan instead of an unsecured one. This is a good option when you are using the money to purchase something that could be repossessed, such as when buying a car from an individual or a set of work tools. If the lender can take the purchase and sell it to get some of its money back if you miss payments, they are not taking as big a risk on you and will consider a lower interest rate.
Co-signer
The interest rate you are quoted is going to depend heavily on your credit score. If you have a less-than-perfect score, you should ask if a co-signer will result in a lower interest rate. You may have a family member or close friend who will co-sign the note for you to save you some money. However, be sure you are going to be able to pay the loan, or your co-signer will end up having to pay.
Any time you apply for any type of loan, it is important to do so responsibly. Having good credit may become very important at some point in the future, so make sure you always pay on any loans you take. Go ahead and buy that car or take that vacation, just be ready to pay for it afterward. Getting a good interest rate will go a long way toward helping you pay the bill.
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