No one ever wants to pay more than they absolutely have to for any of their major purchases, and one of the biggest culprits behind outrageously high bills is the high APR that comes with certain loans. In order to prevent financial headaches or hardships in the future, consider these four ways that you can get and keep a low, manageable APR on your card today.
Research Lenders Before Buying
Just like before you make any other major financial decision, such as buying a car or a house, you should do your homework and put a lot of time into making sure that you are choosing the best, yet least expensive lender that you can possibly find. Conduct your research not only by searching online, but by calling the lender that you have in mind; it will help ensure that you can get a more personalized estimate as to what your rate will be. Sometimes on lenders’ websites, they have more generic APR’s to lure people in, but in reality the loans that they offer come with different rates depending on the financial situation, like the size of the loan or the borrower’s credit score.
When researching lenders, it is also important to bear in mind not just the APR that they would offer you, but keep other factors in mind as well. For instance, although it seems like an obvious conclusion, make sure that the institution will lend to someone with your credit score before you try to seek a loan from them. It is also crucial for to read the fine print in your agreement to make sure that an APR that seems too good to be true is actually legitimate and does not involve any extra fees or any extra clauses in the contract.
Negotiate with the Lender Before Signing
After you have done your research, and chosen the lender who seems right for you, you can still always call or visit the lending institution in order to secure a lower rate if you feel as though your financial situation calls for a lower APR. You do not have to settle for the first rate that they offer you, and in fact, you should not. Use loan calculators to determine how much you should be paying for your APR, and use multiple sources, just to be sure. That way you can go into negotiations feeling confident that you are in the right, and can back up your arguments with hard data.
However, as your financial situation changes, your credit score bounces, the years go by, and life just happens, you can also re-negotiate the rate as well. It is your Annual Percentage Rate, after all, so don’t even be afraid to go to your lender every year and ask for an adjusted rate because of your changing financial situation. This is also helpful if, for whatever reason, you had to switch lenders. This potentially offers you a fresh state, because they don’t know your history, so you can get an even lower APR than your previous lending institution.
Improve Your Credit with a Debt Consolidation Loan
One of the most reliable ways to guarantee that the loan that you are getting has the lowest possible APR is to keep your credit score in its very best shape. In fact, it is such a significant part of the process that earning and maintaining a healthy credit score has taken two spots on this list. There are numerous steps that you can take to improve your credit, but these two are the easiest and best when shaping up your credit to get a low APR. The first method that will help with the second method on this list is to take out a debt consolidation loan from a reliable financial institution.
Debt consolidation loans do not directly impact your FICO score. Rather, they make your financial situation a little easier for you to take other actions that improve your scores. These work by allowing you to pay off all of your debts at once, rather than having to juggle with various collection agencies with various interest rates and due dates. These exist to make your life easier, so use them. Utilizing a loan that fits your current situation not only makes debt repayment easier, but can help you improve your credit score and give lenders greater trust in you as a client.
Improve Your Credit by Paying Bills on Time
Just as with the previous method, your FICO score will not improve overnight just because you have started to make payments for all of your bills on time. However, when lending and other financial institutions see that you have made changes to try and pay your bills and debts on time, then they are more apt to lend you money for future large purchases, and your credit score will improve because of that greater amount of trust.
One of the easiest ways to implement this step is to actually change the way that you pay some of your bills. Instead of having to mark it on a calendar to remember, consider the option of setting up automatic payments that will be taken out at predetermined intervals. That way, you do not run the risk that you will miss a payment due to honest forgetfulness.
Furthermore, if it is a large bill every month, such as a car or a mortgage payment, then see if there is a way that instead of making one large bill payment at a specific time each month, then try and make two or three smaller payments throughout the month so that it feels a little bit more manageable.
If you implement all of the methods that we’ve discussed, you’ll find that you’ll have a much better shot at getting an APR that won’t break the bank. Between making these four sound financial decisions, as well as just using common sense when it comes to cash, you should be able to keep your APR at the low rate that it is for a considerable amount of time.