How to Get Interest Rates Reduced on Loans

by Gray Peters

Many people who have mortgages and other types of loans simply take the interest rate that is offered to them by the lender. Most of these people are unaware that there are a couple of ways that they can get cheaper interest rates. Consumers who are wondering how to get interest rates reduced will be pleased to hear that it is a simple process.

The first thing that people who are in the market for a loan should do is shop around. One of the biggest mistakes that people make when it comes to lending, is to stick with the same provider they have used for the majority of their lives. The lending business is competitive and this means both banks and finance companies are prepared to offer good interest rates to their customer.

Generally a bank will be able to give a customer a cheaper interest rate than a finance company. This is because banks have a lot more security to back them up if their customers do not pay back their loans. Also banks are very conservative about who they lend their money to. If a customer does not have a regular income and a clean credit history, a bank will not touch them. This leaves some customers with no option but to turn to a finance company. Finance companies will then charge a higher interest rate because the customer is deemed to be high risk.

Once the customer has shopped around and has a list of interest rates that various companies are prepared to offer they should get back on the phone. Consumers should now tell the lender that another company has offered them a cheaper rate and wait to see if the lender can give them a discount. Many people are unaware that lenders have a degree of flexibility when it comes to interest rates. While they will not want to drop the rate, they will be prepared to do it in order to snag a customer. Lastly those with very bad credit looking for products such as credit cards for people with bad credit, will have to put up with high interest rates until they rebuild their credit history.

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