Tips For Lowering Interest Rate On Your Loans
Thursday, August 2, 2012, 2:00 AM | 2 Comments
When Federal Reserve injects more life into the economy, it affects both sides of your personal finance coin. On the one side, it lowers your savings yields so you don’t earn enough on your savings or money market accounts.
But on the flip side, it lowers interest rates for borrowers for all kinds of loans. You win some, you lose some.
Or perhaps you win more when you borrow at lower interest rate than you lose when you get the very minimum interest rate (around 1%) on your savings.
Most folks don’t save much but almost everyone borrows for one reason or another.
Borrowing money, therefore, has more weight to it as far as saving money in interest than the measly around 1% interest you get on your savings.
In this post, we will look at credit cards and auto loan interest rates.
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Credit Cards Interest Rate
The average rate on outstanding balance was recently 13%. Lowering your interest rate can be as simple as asking the card issuer to give you a better rate.
For a year or perhaps more, you will save by snapping up 0% introductory rate for a balance transfer.
However, you will likely pay a transfer fee between 3% and 4%. If you are unable to pay off debt within the introductory period, your interest rate will rise.
Some experts suggest to find another card issuer with 0% introductory offer for another balance transfer. But that’s not a good step to take because the cycle will never end.
Better step to take would be to look into an unsecured personal loan to refinance credit card debt. The average rate for a 2 year personal loan was recently about 11%, according to the Federal Reserve. You might get interest rate in single digit if your credit score is higher than 740.
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Auto Loans Interest Rate
Refinancing an auto loan is much simpler than mortgage refinance and can save you considerable amount of money. See competitive local rates at bankrate.com.
When you click on the above link, notice that if you increase the duration of the loan for which to apply, the interest rate rises. That means the less amount of time you apply for, the less interest rate you will get.
If you apply online to Pentagon Federal Credit Union, you might get less than 2% interest rate for a car loan.
Another website is Rate Genius. This website actually matches applicants with lending institutions. However, make sure that your current loan does not force upon you a prepayment penalty. In that case, it might not be beneficial to you.
In a Nutshell
Another option to lower your interest rate might be home-equity loan which carries lower rate at about 7% or even less.
Whatever you do, ask questions. Read the fine prints.
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2 Responses to “Tips For Lowering Interest Rate On Your Loans”
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