Whether you’re purchasing a major appliance or a new vehicle, you want to receive the best deal. After all, who wants to pay more than they have to? Getting the best rate on your next loan isn’t much different. Here are a few tips on how to minimize the amount of interest you’ll pay on your next loan whether it’s to consolidate debt or a credit card.
Review your current situation. If you currently have a loan and are looking to refinance or consolidate, the best way to start is by understanding what your current rate and loan terms are. You might already have the best rate available. Dig out your signed loan documents, review your loan in online banking or contact your financial institution for the information. Knowing your current credit score is helpful too. If your credit score has increased since you took out your loan, you might qualify for a rate adjustment.
Check with your financial institution. What does your current financial institution offer for rates? Credit unions often have competitive rates to pass savings on to you, the member. Ask if there’s a way to lower the rate on a loan through an available introductory rate or current promotions. Some credit unions even offer programs that can earn you a lower rate. Affinity Plus offers a Rate Reduction Bonus based on years of homeownership through its Homeowner Consolidation Loan.
Compare rates. Find financial institutions in your area or online, look up their current rates and compare to them to your financial institution’s rates. Ensure you are comparing rates between similar loan products. Also, be aware of the terms and conditions. Are there special requirements to qualify for the lowest rate; is there a penalty for paying the loan off early?
Be a savvy consumer. Putting in the extra time to check rates can potentially save you hundreds or even thousands over the term of a loan. Rate is important but don’t forget to factor in member service, transparency of terms and conditions and ease of application. Focusing only on rate might have you looking to refinance your debt elsewhere just as soon as you sign your name, finalizing your loan.