Financial assistance may be required at any stage of life, it may be a medical emergency or you want to buy your dream car but can’t afford due to lack of funds. Students might need education loan when admitting to prestigious university or professionals may need a business loan to build a startup. The one thing you should look upon is interest rate. Banks and financial institutions charge high interest rate on loans but your goal should be to get low interest loans in order to save all over income. You don’t want to spend all of your hard-earned money paying EMI’s of the loan.
It’s really important to look for the lowest interest rate possible as lower the rate of interest, the smaller the amount you will pay to the bank. You can use these 5 smart strategies to get low interest rates on personal loans, car loans, student/ educational loans and business loans. These tips will guide you on how to save interest on loans.
Compare Lowest Interest Rates Online
Technology has open new gateways to both customers and banks and now anyone can check the loan eligibility and interest rates online. Every bank and financial institution has web-portal through which you can compare the personal loan with low interest and check the monthly EMI’s.
Most of the financial institutions and lenders facilitates to select banks and sort them according to low interest rate and thus you can get the list of banks offering loans on the best interest rate. The process is simple and effective and what’s more they also have referral programs which helps you to get discounts and other offers while you applied from their portal.
Have a Good Credit Score
An important factor used by banks to decide how much interest to charge depends upon your past credit history and payments. Usually, students looking for low interest education loan cannot be accounted for here, but individuals who want low interest car loan can be considered under this category. A good credit score generally turns out that bank will offer low interest rate loans.
A high credit score builds trust and gives bank idea that you are a loyal customer who will pay EMIs right on time. Moreover, banks welcome such customers as it increases their customer base and you can easily get a low interest rate on car loan or personal loan.
Always Go for Short Term Loan
Banks always charge low interest rate if the amount can be paid in less time, this is because they don’t want to tie up money for longer duration as there is always a risk if anything goes wrong with the time. Short loan tenure derive low interest rate.
This option is best if you are looking for car loans or personal with low interest as the amount sanctioned will be less which can be easily paid in 2 to 3 years. One of the reasons for low rate interest for short term is that bank’s maintenance and processing charges are reduced.
Decide Between Variable or Fixed Rate of Interest
Student loans comes with options in interest rate types i.e. Fixed Rate and Variable Rate. As the loan amount is to be paid after completing the education the basic rate of interest a bank generally charges may vary. However on fixed rates, Interest rate will remain the same and you have to pay EMI based on the fixed rate of interest from the date loan is sanctioned.
If the fixed rate of interest is low and you are comfortable with it to pay in the future then, you can choose the lowest interest rate on education loan. On the other hand, variable rate of interest may rise or fall depending upon the situation, so it is good to go with fixed rate with lowest interest on student loan
Extra Costs and Loan Calculation
This is one of the most significant factors which is generally left out, but it plays a major role in the long run. Bank may be offering you an ideal low rate of interest on your business loan but may be charging a hefty processing fee which will balance out with high rate of interest. So, read the documents carefully.
Another important thing is that what bank is offering the flat rate and not accounting the principal and interest amount over the time of loan tenure. So look closely at each & every particulars and clearly understand all the terms and services from your lender.
As you look out for loans with low interest rate it may require a little effort but save a lot of money. These smart tips will make the borrowing costs as little as possible, so you can fulfill your dream without any worry.