If you're not great at bargaining, learning how to negotiate better interest rates can seem like a difficult task. But don't worry - by the end of this article, you'll be more than prepared to do it on your own.
Here are some things you should know: most credit card companies have floating interest rates, which means they may change depending on a variety of circumstances, including the discretion of your card issuer.
If you phone your credit card provider, especially one with whom you have had a longstanding account, you may be able to get a reduced interest rate on your credit card. Even student and mortgage loans typically have more negotiable interest rates than most people realize.
A few calls, some tips from insiders, or even a well-crafted letter advocating for lower rates could end up saving you quite a bit of money in the long run.
According to a survey, homeowners who obtained at least one extra rate quotation saved an average of $1,500 over the life of the loan. Obtaining five quotations even increased the overall savings by twofold.
When looking for a mortgage, it's a good idea to check rates from several different lenders. This way you can compare not just rates but also closing expenses, fees and any discount points that are part of their figures. Keep in mind though that the cheapest offer might not be the best once all other charges are included so make sure you do your research before making any decisions.
If you want to get a loan with a lower interest rate, there are two things you can do: improve your credit score and reduce your debt.
Your repayment history is 35% of your FICO score, so make sure you're always on time with payments. Also, don't add to your debt while trying to pay off old loans. Your credit usage ratio makes up another 30 percent of your total score - the lower it is, the better chance you have of qualifying for a loan with a reduced interest rate.
If your lender is not willing to lower your rate or if you think the reduction they offered is insufficient, it may be time to look into refinancing. Steven Mickenbecker, an Australian broker says, "Of course, it's simpler to just accept the rate you're given. But if you're 0.2% off of the market's lowest price then that's okay - however, if you're 0.4% off then that really isn't good enough." If this happens and you don't get what you want from your current lender , go to the first or second person on your finalized list and apply for a loan through them instead .
Even though it might not be ideal, refinancing your loan could end up saving you a lot of money in the long run. The sooner you do it, the more savings you'll accrue.
If you're looking to reduce your mortgage rate, you may want to see if your lender offers discount points. Discount points are a type of fee that goes directly towards reducing your interest rate. They typically cost 1% of the home's value - so on a $100,000 loan, one point would cost $1,000. The amount by which a point decreases your rate varies per provider. If you know you'll be in the house for more than just a few years, paying this fee upfront might be worth it in the long run since it can take many years to break even on the investment.
Before booking, find out whether this fee is included so you can see if the total cost is worth it to you.
A locked-in interest rate is an offered guaranteed interest rate by a lender to any individual who closes by a specified date. High-risk borrowers are particularly drawn to these rates as they tend to believe that the general interest rates for similar services will increase in cost between the time when they first submit their offer and finally settle.
Homeowners may find this type of guarantee helpful because mortgage interest rates have been known to change on a daily basis, if not more frequently. When debating whether or not to go ahead with taking out a mortgage, the lending rate is often one of - if not THE most - deciding factor(s). On the other hand, finalizing paperwork and closing dates surrounding sales for houses can take months before completion.
The interest rate market is ever-changing, and sometimes rates can increase even after a house buyer has agreed to purchase a home. An interest rate commitment protects buyers from this uncertainty, essentially securing their financial future.
The next time you purchase a home or acquire a new credit card, remember that you don't have to settle for the first interest rate you're offered. If you follow these steps, it's possible to negotiate a lower interest rate. After reading this article, which provides tips on how to improve your chances of receiving better rates, you'll be prepared to talk confidently with your accountant.
