A loan for medical expenses or personal needs can sometimes be necessary. However, loans can be expensive, especially if you get stuck with a high interest rate. The good news is there are things you can do to get the lowest rates possible on medical and personal loans. This article will provide tips to save you money when borrowing.

Check and Improve Your Credit Score

Your credit score is one of the main factors lenders use to determine the personal loan interest rate for which you qualify. Before applying for any loan, check your credit reports from the three main credit bureaus – Experian, Equifax, and TransUnion. Look for errors that may hurt your scores and get them corrected.

Also, improve your credit in the months leading up to your loan application. Some tips include:

• Pay all bills on time each month
• Pay down balances on credit cards and other debts
• Limit new credit applications
• The higher your credit score, the better loan terms and interest rates you can qualify for. Aim for a score over 730.

Compare Rates from Multiple Lenders

Never take the first loan offer you receive. Shopping around with multiple lenders is essential to getting the lowest rates. Each lender will evaluate your application differently, so the more quotes you get, the better deal you can find.

When comparing lenders, consider both the interest rate and fees to determine the actual cost of borrowing. A loan with a slightly higher rate but lower fees may be cheaper overall.

Apply with a Co-signer

If your credit score or debt-to-income ratio is holding you back from qualifying for better rates, applying with a creditworthy co-signer can help. A co-signer with good credit essentially guarantees the loan on your behalf. This makes lenders more willing to reduce rates.

Remember that co-signers are equally responsible for repaying the loan. Make sure any co-signer understands this obligation before they sign.

Use Collateral if Possible

Using collateral for some home renovation loan interest rates can help you get a lower interest rate. Collateral is an asset, like a car or savings account, that the lender can seize if you default on the loan. This lowers their risk, so they discount rates in return.

Home equity loans and lines of credit are also secured by the equity in your home, making them one of the most affordable borrowing options. Remember, failing to repay secured debt means the lender can take your collateral.

Set Up Autopay and Payroll Deduction

Many lenders offer interest rate reductions when borrowers allow auto-debit payments from a bank account. This saves the lender administrative costs on collecting and processing monthly payments. To get this discount, allow the lender to deduct payments from your checking account each month automatically.

Similarly, some employer-based loan repayment programs offer interest rate reductions when payments are automatically deducted from your paychecks. Check to see if payroll deduction is an option to save money over the life of the loan.

Conclusion

While getting financing can be frustrating, understanding how to find and qualify for the best loan rates can help you save substantially on interest costs. The tips above will set you on the right path to affordable medical emergency loans and personal lending. Just remember to borrow responsibly, make all payments on time, and pay loans off as fast as possible.