Ways to Influence a Personal Loan Interest Rate
It’s not uncommon for a person to need a personal loan. This money is often acquired to apply it to a home improvement project or to have cash for an immediate purchase. While applying for a personal loan may be tempting, you should remember to examine the need you have for the loan, the resources you have to repay it, and the interest rate available.
Many factors contribute to the decision-making process about the interest rate for your personal loan. You have the ability to influence two of those factors through demonstrating financial responsibility and planning:
- Credit Score — We all have heard of a credit score. Your credit score has great influence over the interest rate you receive on some loans, though it is not always the absolute driver of your interest rate. This number is negatively affected by behaviors such as missed payments and over-extended credit limits. It is, however, a give and take relationship. When you demonstrate good behaviors, the score is positively affected.
- Loan Options — The type of loan you want to acquire also influences the interest rate. If you want a secured loan, you must offer collateral, which can typically make the loan cheaper. An unsecured loan is riskier for the lender because it does not require collateral; thus, it often turns out to be more expensive.
You can also consider other factors, such as the term of your loan. If you’re using a loan to purchase a home or car, then a larger down payment can lead to lower interest rates.
How do I Acquire a Personal Loan?
You can begin by utilizing a personal loan calculator. This can help you determine what a payment may be, and help prepare you for your conversations with the bank.
It’s important that you find a financial institution that you feel can help you through the process. More often than not, people find that local banks offer the same services at lower costs and keep decision-making local. This means that you’ll be more than an account number. That’s the goal at First Bank,* and your satisfaction has been our single goal since being established in 1935.
Contact us today to begin the process of acquiring a personal loan.**
*Member FDIC. Equal Housing Lender. NMLS #474504.
**Loans subject to credit approval.