Brainy Loans

Can the interest rate for a personal loan be negotiable?

Negotiating things in life is common among many individuals, whether for a small purchase or a large one. It’s not unusual for consumers to try to get a reasonable price or a battery deal when buying something.

The same tactic should be used when it comes to personal loans, borrowers may want to negotiate the interest rate to get a better deal. Personal loans can be a large expense in someone’s life, so it is natural to wonder if you’re able to negotiate the rates.

Negotiating a lower interest rate for a personal loan is possible, depending on the lender and your circumstance. By doing your part and researching lenders you are able to secure a better deal on your personal loans.

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What's a personal loan?

Personal loans would be a loan type that you can get from a bank or other financial institution. With a personal, a borrower can get funding for things like home renovation, car repair, debt consolidation, larger purchases, and more.

Unlike other loan types, you will not have a specific requirement of what to use the loan for, this means you are able to use the money as you need. Usually, personal loans will be paid back by returning the money you borrowed plus the interest you agreed upon, typically paid back over a period of 1-6 years.

A personal loan could be an amazing option for many borrowers, but it is important to show around and compare rates from different lenders to make sure you’re getting the best deal.

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Proven strategies for securing a lower interest rate on your loans

Negotiating a lower rate with the lenders you’re applying with is an amazing strategy, but on the other hand, there are ways to increase the chances of getting a lower rate right away. Here are some proven strategies for securing a lower interest rate on your loans:

  • Increase your credit score: Most lenders will use your credit score to determine your ability to obtain a loan. Having a higher credit score can help you get a lower interest rate and increase your approval rates. 
  • Shop around: Shopping around and comparing terms offered by different lenders will help you find a lender that has the best rate for you. Be sure to compare things such as the APR, Fees, and funding times to choose the one that will fit your needs the best. 
  • Get a secured loan: Having collateral such as a car or a house can help you qualify for a secured loan which is typically lower interest rates than an unsecured loan. With a secure loan, lenders will have some collateral security, meaning if the borrower fails to pay, they can seize the asset. 
  • Co-signers: If you have a co-signer with a good credit score, you may be able to get a lower interest rate on your loan. The co-signer will agree to be responsible for repaying the loan if you can’t because the lender may be willing to offer lower interest rates because of the decreased risk. 

There are some of the most common ways to secure a loan with a lower interest rate, taking advantage of the resources available to you might save money on your loan in the long run.

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Negotiating a lower interest rate

While these strategies can increase your chances of securing a lower interest rate, the success may vary depending on the lender and market condition. Here are some steps to take to negotiate a lower interest rate for your loan. 

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