Americans paid about $122 billion in interest last year. This is the money that didn’t go towards paying off the actual amount borrowed or what is called the principal. The more money Americans pay in interest, the longer it takes to pay off the debt and the more money spent overall.
If you’re seeking out loan help, you’ve come to the right place. These five tips will help you reduce the amount of money you spend on interest when repaying your loans.
1. Try a Credit Union First
Reach out to smaller banks and credit unions first when applying for your loan. These smaller lenders tend to offer lower interest rates than the larger national banks.
Research your local credit unions and see if you qualify to become a member of any of them. If you do, then you can move forward with seeking out a loan.
2. Sign up for Automatic Payments
Most lending institutions will offer an interest rate reduction if you agree to sign up for automatic payments. They do this because they’re more likely to get full on-time payments when they can do it themselves and not wait for you to process payment each month.
This strategy won’t work with a credit card but if you learn about personal loans, auto loans or mortgage, you will know that many lenders help their customers to set up automatic payments in seconds.
3.Improve Your Credit Score
One of the best ways you can secure low-interest offers is by improving your credit score. While you can’t magically raise your credit score overnight, there are a few things you can do to raise it over time.
Start by making all of your payments on time. Catch up on anything past due and keep all accounts current.
Next, start paying down the debts you currently owe. Using too much of your available credit will make your score drop. Don’t close older accounts because their old age can help your credit score.
You can also ask your credit cards for a limit increase. Be sure to only ask if you have a history of on-time payments. This increases your amount of available credit and reduces your debt to credit ratio.
4. Consolidate Your Loans
Look into consolidating some of your higher-interest loans. You can do this by looking for a consolidation loan with favorable terms. The new lower interest rate will help you pay off your debt faster and reduce the amount of accrued interest.
You can pay your consolidated loans off faster, which will reduce your overall debt liability. This will, in turn, increase your credit score, which will help you secure a lower interest rate on future loans.
5. Make More Frequent Payments
After you have the loan and you’re making automatic payments, try to make additional payments. These extra payments can eat away at the principal and reduce the amount of interest accrued on the loan.
You’ll pay the loan off faster and ultimately pass less interest in the long run.
Try These Tips for Loan Help
If you’re looking for loan help, these tips should help you secure a loan with more favorable terms. Then they’ll help you pay the loan off smarter. By doing these two things, you can save money by reducing the amount of interest you pay over the lifetime of the loan.
Are you ready to buy your first home? Read this guide and learn everything you need to know as a first time home buyer.