How To Get Lower Interest Rates On Your Personal Loan

A personal loan requires no collateral to secure and is based on credit worthiness and the ability to repay. As these loans are unsecured, the interest rates are typically high. It is possible to get low interest personal loans or to request a reduction in the interest rate. Following a few guidelines will assist you in getting the lowest possible interest rates on your loan.
Step 1

Your credit score usually determines what interest rate you will qualify for. The higher your credit score, the more confident a lender will be in your repayment abilities. It is important not to miss payments with any lender as 35% of your credit score relies on timely payment. Another 30% is determined by your credit utilization rate, so keep balances down. Lastly, don't open any new accounts as new credit is reflected by 10% of your score.
Step 2

Go to your bank and ask to have your interest rate lowered, especially if your credit score improved or if you have been a reliable customer to your lender. The lender may consider refinancing your loan. Sometimes the lender will approve the rate decrease without a refinance, but this only happens on rare occasions.
Step 3

Ask about refinancing the prevailing balance. You have a better chance of getting approved if your credit profile improved or if new rates have been introduced on the personal loans market. If you are approved, simply apply the new loan to the old one.
Step 4

If you have equity in a current mortgage, think about requesting a secured loan by obtaining a second mortgage or asking for a line of credit based on your home equity. These generally have lower interest rates because your collateral reinforces them. Collateral doesn't have to be a mortgage. There are many other types of collateral that you can use to procure a personal loan.