If you are in need of a personal loan due to financial constraints, you might be concerned about the interest rate. While it may seem small now, it has a large impact on how much you pay each month for the loan, as well as the overall amount you end up paying. Here are some tips for getting a lower interest rate with your loan.
Choose the Lender Wisely
It is incredibly tempting to just go to your regular bank and apply for a loan, but this is not always the best option. If you belong to a large, corporate bank, you might find that the interest rates are higher and that it is more difficult to be approved for the loan. A better option is to find a smaller lender or a credit union. If there are no reputable credit unions in your area, look into small lenders that are offering smaller interest rates for personal loans.
Improve Your Credit Score
The next thing you can do is to get that credit score up a little higher. You can get a copy of your credit report and review the information to make sure it is accurate. If you find something you don't recognize, contact the credit bureau to have it removed, as this could be lowering your score. By paying your bills on time and keeping up with any credit card payments you have, it will go far in increasing your credit score.
Consolidate Your Debt
One thing the financial institution or lender is going to look at when you apply for a loan is what your debt to income ratio is. They want to see that after your current debt, you still have a substantial amount of income. This isn't just income to live on, but enough to pay the loan you are now applying for. If you have a low income compared to your current debt, it is time to pay off that debt as much as possible or visit a debt management company to get assistance.
Ask For a Smaller Amount
It is possible that if you apply for a personal loan with a lower amount, the interest rate won't be quite as high. When you borrow less money, you then become less of a financial risk for the lender, so it often results in a little break from the high interest rate.
With these simple tips, you can get a personal loan for what you need and not pay high interest rates in the process. Contact a lender, like US Community Credit Union, for more help.