5 Strategies For Getting Lower Rates On Your Loans
This guest post was kindly submitted by DebtLoans.com.au.
Please note that this has been written by an Australian blogger and therefore some of the suggestions or information may not be appicable here in the UK. Remember that this post does not take the place of seeking professional loan or debt advice.
5 Strategies For Getting Lower Rates On Your Loans
How They Help
While most people are focused on just lowering their monthly payments, lowering the actual interest rate that you pay on your loans could be extremely beneficial. This is especially true with long-term loans like mortgages, where the total interest paid over the life of the loan could be more than the value of the home. In some cases, a lower rate could result in instant savings of thousands of dollars.
How To Get Lower Rates
Your creditors may try to act like your interest rates are already at the minimum they offer. Credit cards in particular offer you an initial interest rate, but always have the option to raise it to over 20% even if you miss only one payment.
To the consumer, interest rates may seem like they can only get higher—luckily, most of them are adjustable and negotiable. For your home loan, you may have to wait until the national interest rate changes, but other loans, especially credit cards, just require a few phone calls and no cost.
Lower Your Mortgage Rate- By watching the changes in the average national mortgage rate, you may be able to find a good time to refinance your home loan. Even a reduction of fraction of a percent could save you thousands of dollars over the course of your loan. However, don’t forget to factor in all the extra costs associated with refinancing, such as termination fees, administration fees, and teaser rates that change over time. Keep in touch with your mortgage broker for information on current rates.
Consolidate Your Credit Card Debt- By learning how to consolidate your credit card debt you could save on either your monthly payments or your overall average interest rate. Also, by consolidating your various debts into one loan, you avoid having to keep track of different creditors and each payment. If you get a favorable deal, the interest rate on your consolidation loan may be lower than the average interest rate on your credit cards. However, beware the dark side of debt consolidation.
Transfer Your Balance To A 0% Card- Another popular method to quickly eliminate your interest payments is by transferring your existing balance to a promotional 0% APR card. While this strategy requires discipline to shift the money around to the right cards at the right times, many people have successfully used this to save thousands of dollars per year in interest. In fact, some people even make money by borrowing at 0% and earning interest on the money by participating in credit card arbitrage (though this can be very risky).
Peer-to-Peer Lending- Another way to consolidate your loans yourself is by taking out a loan on a peer-to-peer lending network such as Propser.com (Note: This is an Autralian article so the information contained may not apply to UK readers). When you use a peer-to-peer lending network, you post information about yourself, how much you need to borrow, and why you need the loan—many people explain that they are trying to consolidate their loans. Then, individual lenders bid to loan you money; the best thing is that these networks take care of collecting the bids and redistributing your payments. By winning the trust of these lenders, you could ensure lower rates than you would get from conventional institutions.
The Lower The Better
While you may find that one of these strategies works very well for you, don’t stop after just one. The idea is to exhaust all of your resources to lower your interest payments as much as you can. Even without increasing your income, these strategies may help you save thousands of extra dollars per year. And remember, while extra cash you have may be used for some fun, keep your long-term goals in sight and invest for your future.
