One of the important factors when it comes to loans is the interest rate. It is what determines how much the debtor will end up paying. The general advice that many people hear when it concerns the interest rate is the lower it is, the better. However, there are times when a borrower has to settle for a particular interest rate instead of waiting for a better one. Fortunately, these rates are not permanent.
They can go up or down depending on the condition of the economy and the market. The key here is knowing how to change the interest rate when necessary. Here are some things you can do to make your interest rate lower:
Call The Lender
The very first option that you should be trying is to call the lender and negotiate. Whether it is a student loan or a home loan, the main goal of lenders is to collect money from you. If you have a legitimate reason for needing a lower interest rate, they might be willing to allow it. For example, if you are facing financial difficulty, lenders would be willing to lower the rate. Their reasons would be that it is better that you pay a lower rate instead of being unable to pay at all.
When you’re negotiating, several points might be in your favor. If you have been consistent with your payments, your lender might be willing to help out. You can also do some research and find out whether your lender now offers a better interest rate than when you initially borrowed. However, be ready to receive a rejection. That is fine since it cost nothing but your time to call and negotiate.
Do A Balance Transfer
For credit card debt and other loans, it is possible to do a balance transfer to get that lower interest rate. This is very popular for credit card debt since it is a simple process. Additionally, it allows for better benefits for the credit cardholder such as frequent flyer miles and cashback deals. There are also many credit card companies out there that are very willing to help people transfer their balances to get new customers.
The important thing when planning a balance transfer is to do the needed research and read all the details. Some balance transfer promotions offer zero percent interest for transferred balances but that might not last. You might be required to pay on time to keep that benefit. Ensuring that you know all the details of your balance transfer will make it easier for you.
Choose to Refinance
Refinancing is simply taking out a similar loan and using that to pay off the old loan. From then on, you will be only paying the new loan with a hopefully lower interest rate. Refinancing home mortgage loans is a good tactic since these loans are usually long-term and a lower interest rate can save you a lot of money over the years. Student loans are also a popular target for refinancing for the same reasons.
There are several ways to make refinancing work for you. For one, you can refinance to get funds for house repairs, while also paying off the older debt. You’ll have to do some calculations to ensure that you won’t be paying much in the long term. You can also get a loyalty discount if you are refinancing with the same lender. Another method is to lower the repayment time.
For example, instead of a 30-year mortgage you initially have, you might be able to get a 10-year mortgage with a low rate. This might mean high monthly payments but also less money you have to pay.
Look For Autopay Deals
Thanks to modern technology, borrowers can automate their debt payments. This is a great convenience. It is also very reassuring to many lenders since they would know that they are getting paid. They are encouraging people to sign up for it by offering a slight discount on the interest rate. Talk with your lender to see if they have the discount and use it.
Combine it with other methods so that can have a much lower interest rate. Besides giving this discount, autopay schemes also ensure that you don’t miss a payment which can protect you from getting late fees and higher interest.
A better interest rate can shave years off a debt repayment. They can also make it less of a burden to pay. The options above should make it a lot easier for many people to eliminate their loans with minimal problems.