Borrowing money can be a double-edged sword. A hefty loan allows you the freedom to purchase a home or car, attack a remodeling project, etc. However, the sometimes heftier interest rates may leave you repaying much more than the principal amount. In a diminishing economy, high interest rates are no longer the norm. Take advantage of the economic climate by lowering your own interest rates with the steps below. The results could put hundreds or even thousands back into your pocket.
Step 1: Rebuild your credit. In a world of loan defaults and collections, low interest rates are a type of reward for those who have maintained a healthy credit score. Begin your efforts by ordering a free copy of your credit report and credit score from Lexington Law. Review the contents carefully with your paralegal to verify both basic information as well as any overdue payments, inaccurate information, and any other examples of unfair credit reporting that could negatively impact your score. Repair as many issues as possible by paying overdue bills, investigating and challenging unfair or inaccurate information, and even paying down debt. Remember, the higher your credit score, the lower your interest rate. If you need extra help during this process, consumer advocacy law firms like Lexington Law may assist you with identifying other applicable credit rebuilding solutions.
Step 2: Shop around. After rebuilding your credit, it’s time to shop around for the best possible interest rate. Regardless of whether you already have a loan, market research is the best way to determine whether your credit score can help you gain a more competitive rate. Call a few prospective lenders and request a quote that includes the interest rate, monthly payment, and life of the loan. Your findings will help shed light on the best option.
Step 3: Contact your lender. If you are already have a loan, contact your current lender and ask them about your refinancing options. Outline your efforts to rebuild your credit and request a reassessment of you loan based on your new credit score. Many lenders are receptive to long-term clients with positive payment histories. If you request is denied, however, it may be time to go with another company. Inform your lender of their competitors’ lower rates and your intention to transfer your loan to their services. With a loan in limbo, your lender may be more open to lowering your rate rather than losing your business.
Paying interest is an unfortunate side effect of borrowing money, but avoiding high rates is possible with a responsible credit history. If you want to save money and increase your negotiating power, begin by taking your credit seriously. It may make all the difference.