How to Lower the Interest Rate on Credit Cards, Home Loans and Personal Loans

How to Lower the Interest Rate on a Home Loan

Bankers are aggressively decreasing the Home Loan Interest Rates. What if you are an existing borrower? The people who have taken housing loans prior to April 2016 are still paying a higher rate as their borrowings are either prime lending rate linked or base rate linked. They can still be able to lower the housing loan interest rate. How? Here goes the answer.

If the bank is the lender, a shift from a base-rate to a marginal cost lending rate can serve the purpose. There is a conversion fee. If the loan is with Non-banking Finance Companies (NBFCs), you have an option to reset to a lower rate. The costs and benefits associated with switching rates should be evaluated. It does not make sense if conversion fee exceeds your savings. Experts advise you to keep the loan tenure as short as possible and pay your EMIs in time.

How to Lower the Interest Rate on Credit Cards

People use a credit card to transact. A higher interest rate charged on your credit card can increase debts. If you are a regular user of credit cards, be assured that you are charged optimally. The credit card interest rate can be lowered in two ways. One is to negotiate a lower rate with your banker and the other is to transfer the balance to an optimally charged credit card. Negotiating a lower rate on your existing card is better than obtaining a fresh card with a lower interest rate.

The previous history of inquiries you made to open a new account may badly affect your CIBIL score. Moreover, you cannot run away from your outstanding credit balance. It is better to be well aware of the interest rates charged by credit card companies. Using this information, you can negotiate a lower rate. No banks want to lose customers. You can expect a competitive rate. Being loyal to your banker for a stretched term is also a useful idea.

Consider transferring the card balance to a card with a lower rate if negotiation does not work for you. It is the easiest way. Keep in mind the most vital considerations like annual fees and balance transfer fees. Pay your bills in time. Avoid deferred payments. Credit card utilization ratio should not exceed 35%. Anything more than 35% will impact your credit score.

How to Lower the Interest Rate on a Personal Loan

People obtain personal loans for a variety of reasons. Like any other financial products, even personal loans are offered with an interest rate called annual percentage rate (APR). There are two ways in which the personal loan interest rate can be reduced: 1) switching to some other banker and 2) pledging an asset to get a loan. The first option is expensive because you have to pay a pre-closure fee of 2–5% of the outstanding loan amount. Pledging an asset to obtain a loan is considered inexpensive.

A credit report is of great help. It can be downloaded freely. Many people do not pay attention to this. Understand where you stand with respect to your credit score. If you think you are well-rated, bring it to the notice of your lenders to negotiate a lower rate. Consult investment advisors for more information.