However, sometimes you need financial help when credit is low, and loan agencies can be reluctant to provide what you need. Here are a few tips on how to get lower loan rates even with lower credit scores.
It’s possible that your circumstances require you to take out multiple loans at the same time. If this is the case, you may be able to get a better rate on the value of all those loans through consolidation. A successful consolidation will put all your individual loans under one larger loan with a single rate of interest or payment.
While this typically won’t result in an incredibly low rate for the bigger loan, it will be lower than the rates for all of the other ones combined as you were paying before.
This can help keep your overall costs down and make it easier to manage your payments. It should be noted, however, that this method only works if you’re working to get out of debt, instead of as a method to open up the opportunity to take out more loans.
Part of the reason some lenders are reluctant to give out loans to those holding low credit scores is it can appear like they won’t be able to pay them back.
However, collateral is one way you can secure a loan even if you don’t have great credit. Offering up something as collateral against the value of the loan you take out gives the lender a show of good faith.
It’s also a way for pawn shops such as The Jewelers and Loan Co Quincy to possibly recoup the cost of their loan if you find you cannot pay it back within the specified time frame. You can usually just reclaim your collateral after you pay back the loan and interest fees.
Just about anything of significant value, from watches and necklaces to cars and home leases, can be used as collateral. Only offer items that you can afford to lose, however, if you believe there is a fair chance that you may not be able to repay the loan.
Get a Co-Signer
A lending agency may not want to give you a loan if your credit score is too low. However, you might be able to convince them otherwise by bringing a co-signer on board with you. A co-signer is anyone willing to underwrite the cost of your loan. This person agrees to be responsible for the value of your loan along with you and may be able to help with payments if necessary.
The most common instance of this is parents co-signing for their children to allow them to get lower interest rates on car loans, student loans, and mortgages. However, make sure that the person who is co-signing has a good credit score themselves, or else it won’t make a difference in the overall resulting rates.
other valuable tips:
Negotiate Between Multiple Banks
It can be helpful to negotiate a loan deal between multiple banks. One bank may refuse your loan request outright, but a different institution may see reasons to approve it. Note that your chances for approval might be higher if you have an existing relationship with the bank from which you’re requesting a loan.
Once you have a quote from one bank, take it to another and ask if they can top it. Banks are businesses, and negotiating by this method can make you more appealing as a potential client and make them more willing to do what it takes to get you to work through them.
Whether you need a loan for a car, housing, education, or even just to carry your financial needs through a sparse period, low credit doesn’t have to be your deciding factor in your interest rates.
With a little extra research and effort ahead of time, you can find ways to make your loan affordable for your needs. When in doubt, seek consultations with financial advisors so that they can further inform you on your financing options.
Image Credit: Pixabay
end of post … please share it!