Credit cards and other forms of consumer loans have landed a lot of people in financial quagmires that they are still fighting to come out of. Does this now mean that credit cards and other financial instruments are bad? The answer is a categorical NO! The thing with these instruments that put people into trouble is lack of proper use which stems from lack of due diligence before engaging any of them.
One of the significant issues that lead to seemingly perpetual indebtedness is high interest loans with short repayment window. This therefore means that looking out for low or lav (Norwegian) interest loans is good place to start when looking to engage any financial instrument. In this article therefore, we will share tips to help you access loans with low interest rates.
Tips for Accessing Loans with Low Interest Rates
We have already pinpointed one of the serious issues that trap people into indebtedness. Now we will go ahead to give you tips that will help you get the right kind of loans with low interest rates that will ensure that you get out of the debt trap.
Keep Track of your Financial Record
If you plan to take out a consumer loan at any point in time, it is imperative that you keep track of your financial records. This means that you have to know your debt profile and credit score; you must know how much you owe and how the repayments are panning out which in turn affects your credit score.
In case you do not know, your credit score affects not only the amount that you can expect to get from lenders but also the interest rate that the lender is willing to offer. If you do not know your credit score before applying for a loan, you may be caught unawares with little or no time to do anything about the rates that you are given. This therefore brings us to the next point…
Work on Improving your Credit Score
Knowing your credit score before applying for a credit facility gives you the opportunity to work on improving it if it is not as high as it should be. A high credit score gives you leverages to negotiate lower interest rates than people with low scores. A high score indicates that you have financial integrity because you honour your obligations while a low score indicates otherwise. So if you want to improve your credit score do the following:
- Pay your credit card bills in full as at when due.
- Make your monthly repayment on any loan that you have.
- If you have multiple loans, endeavour to repay the most expensive one off first.
- Do not take out multiple loans at the same time.
You can visit this site https://economictimes.indiatimes.com/ for more information on how to improve your financial history.
Check out as Many Loan Offers as Possible
Most times, when people face financial emergencies, they tend to make uninformed decisions. One of the things that can get a consumer in trouble is choosing /accepting the first loan offer that they get. Rather than just pick the first offer you get; it is recommended that you check out as many offers as possible. Conduct a comparison shopping by visiting manylenders and checking out their offers.
Look at every parameter of the product and compare with similar ones. It will amaze you to find out that there are lenders who will offer you great services with very reasonable terms and conditions. So, take out time and put in some effort into doing your due diligence.
If, however, you do not have the time or the financial acumen to sieve through a respectable number of offers, you can engage the service of a loan agent. These professionals work with a network of lenders and they know how to help you apply to several lenders and even get offers without harming your credit score.
Use your Salary Account
One sure way that employees can get low interest credits is by applying with their salary account. Most banks are willing to extend credit to customers whose salaries are domiciled with them at very affordable rates. This is because they have first-hand information of the financial security of the customer. Additionally, they know they can easily get their money back because the customer’s salary will be paid into their account in their bank.
Apply with a Co-Signor
This tip is mainly for people who have low credit score or short financial history. Applying with another person can help to increase your score because your details will be combined as one. This means that getting someone with a good credit score and history will boost your own score and qualify you not only for higher amounts but better terms and conditions.
Bear in mind however, that responsibility for repayment of loans lies with both parties. Therefore, if you have a good credit and someone with poor credit approaches you to co-sign a loan, you take on the person’s liability and if they fail to pay their own bit of the loan, you will be liable. This is why it is important to only co-sign a person that you trust.
Put up Collateral
Collateral is an asset of equal or higher value than the amount that a borrower is applying for. This asset is placed as security and can be repossessed by the lender if the borrower fails to repay as at when due. For example, if you put down your home as collateral for say a medical loan and you end up defaulting, the lender has legal right to take over your home. They can decide to do whatever with the house in order to recover the debt.
This therefore makes the loan a low-risk agreement which attracts lower interest and better terms and conditions. Click here for more information.
Loans are financial instruments that if used properly come in handy not only in emergency situations but also for proper financial planning. The sad reality is that many people do not take out the time or put in the effort needed to get the best out of them.
In this article however, we have shared sometips, and we know that these tips will help you make informed decisions going forward.