A low APR (Annual Percentage Rate) loan is almost always given to loan applicants whose credit rating is excellent. You can do a lot to improve your chances of getting a low-interest rate personal loan by improving your credit score. Besides your credit score, there’s very little left to getting any loan with a low-interest rate.
Of course it is possible to get a loan from friends and family members, where the rates are really low. In fact in most cases, loans obtained from friends and family members as well as from your work place, do not attract any interest at all. However, if you want to borrow from regular lenders such as banks and other mainstay financial institutions, you should consider these steps to help you get the loan at a low rates.
In this article we show you 4 tips to increasing your credit score if it is not good.
1. First Things First.
Improve your credit score. Low APR personal loans are normally given to applicants with high or stellar credit scores. To raise your credit score, remove as much of your debts as possible and pay your bills on time. Also refrain from making too many credit enquiries. Whenever, you make a credit enquiry by applying for a loan or credit card, it lowers your credit score.
2. Apply for Personal Loans Using Collaterals.
Unsecured personal loans have high interests rates even if you have excellent credit score. So to get a low APR personal loan, consider getting a secured loan instead. For example, you can use your car title as collateral. Usually the value of the collateral must be equal to the amount of loan you want to borrow. Secured loans usually come at lower rates than personal loans.
3. Using a Co-Signer
The next tip of a low APR personal loan is to get a co-signer. This is also referred to as a co-debtor. You can ask a relative (parent, sibling or spouse) who have good credit rating to sign the loan with you. When you have a co-signer, lenders take into account their credit rating of the before determining the interest rate at which they give you the loan.
The APR will be low if the co-signer has an excellent rating. Ensure that you do not default on the loan because if you do, then the co-signer will be responsible for paying the rest of the loan and the interest. Besides it will negatively affect his or her credit rating so be aware of this.
4. Essential Comparison Shopping.
There are different lenders with different rates. So do some essential comparison shopping using loan comparison websites. After you have compared some lenders, contact a couple of them and ask for a quote. They would take the information you give and calculate the interest rate and monthly repayment amounts, and send you everything you need to know on that loan. Select the one with the lowest APR.
When you get the loan know that it is a great chance to rebuild your credit rating. Follow the tips in Step 1 above and within 6-12 months you should see your credit score begin to improve. Continue the process and over time, your credit score too will be close to becoming excellent.
From that point forward after you’ve obtained an excellent credit rating, you can apply for most loans and expect to get a low APR.