Bank loans and lines of credit can be an incredibly useful financial tool to help you accomplish your goals – whether to travel around and see the world or to buy a car to commute to work. It’s always better to save than to spend but when the situation calls for it, there are few things more convenient than having a credit line to dip in to. Let’s take a quick look at three great tips for saving money on your next bank loan, including how to squeeze your lender for a better interest rate.
Try to Keep your Credit Rating Clean
The first and most important step in saving money on a personal loan or line of credit is to go in with a squeaky-clean credit rating. This is most easily accomplished by being diligent and paying off all of the credit cards and bills that you have; once something goes to collections, it can wreak havoc on your credit history and can be very, very difficult to get rid of.
If your credit rating is currently in rough shape, it might be worth sitting down with a debt counselor who can help you get everything sorted out so that banks won’t turn you down.
Sit Down with Multiple Banks and Lenders
It’s rarely a good idea to accept the first offer in life, and this holds true when signing up for a loan or credit line with a bank. Make sure that you visit other banks that you have no previous relationship first, including smaller institutions like credit unions that will be anxious to win your business and may throw some additional incentives your way. Keep in mind that it may show up on your credit record that a number of different banks all accessed it around the same time, which can look suspicious to future lenders; it’s recommended to max out at around five banks when shopping around for a loan.
Negotiate your Loan to More Favorable Terms
Like making a major purchase, there is almost always some room for negotiation with a bank when you are discussing a loan or line of credit. The major areas that you will want to focus on are the loan’s interest rate and the payment terms; obviously the goal is to reduce the interest rate as much as possible and to get as favorable re-payment terms as you can. The better your credit rating is, the more luck you are going to have with negotiating things so work to keep your credit as clean as possible to prevent issues down the road.
Remember: You’re the Customer!
Bankers and loan officers may seem intimidating, but keep in mind that you are the customer and that you have the upper hand in negotiations with any bank. The bank wants your business, and they know precisely how much the average new customer is worth. By negotiating and taking an active part in the loan process, you can ensure that you get out of there with a nice loan at an interest rate that works for you. Good luck!
This post is brought to you by the team at TXTLoan.co.uk, the leaders in loans by text. To find out more about getting a loan by text message, visit txtloan.co.uk.