Nowadays every second person in Latvia borrows loans, but who would not like to reduce his / her loan interest rate? Credit is an expensive service, so the interest rates on any loan are high – so high that, in the economic circumstances of our country, after a loan payment, future expenses must be carefully planned each month to make it to your next salary. Loan interest rates depend on many different circumstances, but first and foremost on the type of loan. For various types of credit, interest rates range from as little as 5% to as much as 200% per annum, such as so-called fast loans. Other factors that affect interest rates include, for example, the borrower’s credit history and creditworthiness, the amount and term of the loan, and the particular lender and timing of the loan. The following article will give you tips on how to slightly lower your loan interest rate, thus also reducing your monthly loan payments.
Contact your lender
This seems to be the simplest and, unfortunately, the least used way to reduce your credit interest. As experience has shown, often leaving or otherwise communicating with your lender is welcoming and agrees to slightly lower the rate. However, for this to be possible, the borrower must have sound arguments. Arguments can be many, for example, you have always been a loyal and loyal customer and have always made credit payments on time, you are in a financially difficult situation, such as a family growth, job loss or downgrade, and , you will no longer be able to make credit payments. It should be noted that the rate is not reduced significantly by only a few tenths in the case of a long-term loan and by a few percent in the case of a short-term loan.
Another option that can help lower the interest rate is a change of lender and therefore a change of credit. Very often, lenders attract and entice new customers by offering them lower interest rates if they come from another lender, but these situations require caution. Loan restructurings often require significant amounts and, in the case of short-term loans, even interest. Before you restructure your credit, it is imperative to consider whether taking such a step is profitable at all.
Consolidate your loans
If you are one of those borrowers who have multiple short-term, high-interest loans, then it might be more profitable to consolidate them into one large long-term loan, which will, in addition, have a lower APR. As experience has shown, credit consolidation is always beneficial and the borrower is only the winner as a result. Credit consolidation, in simple terms, is the process of taking out a new loan to pay off all your old loans, only in this case the borrower pays not one, but only one.
Pay back your loan faster
Monthly loan payments can also be reduced by repaying the loan faster. Faster loan repayment reduces the principal amount of the loan and hence the interest on the loan. Of course, paying off your loan faster is not easy, but it is worth taking a few months or so, as you say, to tighten your belts and pay more in your loan payments to save more money in the long run.
All of these options can only work if you make all credit payments on a regular, timely and complete basis. Otherwise, lenders will realize that you are simply unable to pay the loan at full cost, so try to go the easy way and not deserve to get lower interest rates.