If you are like most people in America, you have or will likely take out a loan at some point. Whether you need a mortgage for a new home, a car loan for a new car or a student loan for university, loans are sometimes needed.
When getting a loan, your goal should be to spend as little as possible, while still getting a loan that satisfies your need. In order to do that, you need to try and get a solid interest rate on your next loan. While the interest rate isn’t the only thing to consider, it is quite important and will dictate how much you pay over the lifetime of your loan.
With that in mind, this article is going to take a closer look at three solid and proven ways to get a better interest rate on your next loan. Whether you get your loan from a traditional lender like a bank or credit union, or an online lender like Loanable, getting a low interest rate should be at or near the top of your checklist when securing a new loan.
One of the most important things that factor into the quality of your interest rate is your credit score. Your credit score is a three digit number that is a quick and easy way for lenders to see the health of your credit. These scores range from 300-850 in the USA, and anything over 700 is considered a good score, and a score at this level should grant you access to great interest rates.
If your credit score is bad, you might want to take steps to increase it before applying for a loan. You can improve your credit score in a number of ways such as making payments on time and using your credit responsively.
In addition to your credit score, you should also make sure that your credit report is up to par as well. Your credit report will have information on your credit history, any active credit you currently have and more. The better the health of your overall credit, the better chance you will get at a low interest rate.
Shop Around and Do Your Homework
If you simply get a loan at the very first place you visit, the chance of you getting a good rate is not going to be that high. Instead, you want to shop around to different locations and do your homework. The more places you look and the more comfortable you get negotiating an interest rate, the better a rate you will eventually secure.
Your local area likely has dozens of potential lenders, and the online lending industry has opened up millions of people to even more options. Each lender will have different terms, prices and rates, so the more places you look, the better chance you have at finding a place that will offer you a good interest rate.
Get a Secured Loan
A secured loan is a loan in which collateral is put up to protect the lender. You can put your car, home, or even savings account up as collateral. If you default on the loan and miss payments, the lender will legally be able to seize the asset and sell it to get the money back that they loaned to you.
Because these loans are less risky for lenders, they will often give out lower interest rates. So if you are sure you won’t default and can make all the payment on time, a secured loan is a solid way to get the best interest rate on your next loan.
In conclusion, we hope that this article gave you some solid information about how to get a solid interest rate on your next loan. While there are other things you can do to help, these three tips will get you on the right track.