Getting a loan is quite simple today. There are also plenty of flexible loans where the purpose would not matter. For each type of loan, there are plenty of advantages and disadvantages. Weighing all the pros and cons and considering the rates of interest and time of approval would all help you find the most suitable loan for you at any given point. In most cases working on your credit score alone would do the trick and help you get the best rate for the loan. There are many other things you could do to mitigate the interest rate. If you are confused about the best loans to take and the best options at your disposal, this page is great, to begin with,

Why does the rate of a loan matter so much?

When you choose a loan the chances of your application being approved would depend on the loan rate. The interest rate would determine the maximum loan amount that can be granted. The loan rate offered by a bank or lending institution at a given point might be the only parameter that is fixed. So the monthly installment required for the chosen loan amount would be calculated. This would then be compared with the monthly repayment capability of the borrower and then the loan amount that could be sanctioned would be decided. As the borrower, the rate determines the type of expenses that you would have to bear in the long run.

So what can you do to reduce the interest rates?

When the interest rates go down, you can automatically expect a larger loan amount and also end reducing the monthly financial burden. Here are a few tips to achieve that –

Use a comparison tool

Earlier when you had to compare the various loans you had to gather information about each and then pick out the parameters that help compare them better. But today there are various online platforms that can help in the loan comparison process. All you have to do is to enter the desired loan amount and the tenure you can handle and you would get a detailed comparison of the various types of loans available and the various lending institutions that would suit your needs. This is a good way to find the best interest rate offered. Once you have shortlisted the most affordable interest rates you can then directly approach the lending institution to negotiate the best rates.

Get your credit report

Before you approach the lender to make sure that you know your credit score and its implications. Basic calculation of credit score might be available for free with a few online tools. There are others where you can pay a small amount to get a detailed report.

Choose a shorter term

For several loans, the tenure directly determines rates fixed on the loan. So if you would be able to repay the amount in a shorter duration then you can expect better rates for the loan.

Consider the type of interest

Some banks have fixed rates while some have variable rates. In a majority of the situations, people prefer fixed rates over the variable. So at a given point if you find that the rate of interest offered by a lending institution is relatively low but it has a variable pattern then a slightly higher interest rate with a fixed slab is going to be a better choice. With a fixed rate you would know the exact amount that you would be paying as the installment and this would help you plan your budget. But there are some types of loans where a variable rate would be a better choice- especially for personal loans offered by standard lending institutions and banks. If they have caps set on the variation in the rates then you would know the exact limits between which the rates are prone to sway. There is the benefit that some of the installments might be lower than the others.

Improving your credit score can be the most reliable way to reduce the loan rates. Then there is one other thing that many forget to do – negotiation. Do not be afraid to just ask the lending institution for a better rate. They might help you with recommendations about some beneficial ways to reduce the rates.