Getting a Fixed-Rate Loan Now Could Help You Save
Inflation is the highest it’s been in decades. To attempt to slow it down, the Federal Reserve has already increased interest rates; and financial experts say that we should expect more rate increases in the coming months.
Higher rates mean the cost of borrowing is going up. If you need extra funds now or expect to in the near future, here are some reasons why you should apply for a fixed-rate personal loan now:
Take advantage of current lower interest rates
Since early 2020, personal-loan interest rates have been lower than in prior years. Over time, those rates will creep up. A difference of just a couple percentage points in interest can translate to paying hundreds more over the life of a loan.
Avoid variable rates
With inflation, rates will continue to go up. If you need to borrow money, it may be more difficult to get a loan with an affordable rate and payments the longer you wait to apply. Debt with variable rates that are affected by the market — like credit cards — will continue to get more expensive as interest continues to creep up whenever the Fed adjusts the base rate. So finding a fixed-rate option — like a personal loan — is more prudent.
Have predictable payments
You can’t control interest-rate increases, but you can choose to get a fixed-rate loan. Most personal loans have fixed rates that won’t change from month to month based on economic conditions. That means your payments remain the same over the life of the loan and fit into your budget better.
Consolidate high-interest debt
Revolving debt, like credit cards, has a variable interest rate that rises along with inflation. If you’re trying to lower your monthly debt payments or pay off your debt faster, you could get a debt-consolidation loan and lock in today’s lower rate to save more.
Getting a lower interest rate on a new loan
You can also improve your chances of getting a lower rate on a personal loan by doing the following:
• Boost your credit score — Lenders consider credit history and scores, among other factors. If you can improve your score before applying for a loan, it could help you obtain a lower interest rate.
• Pay down existing debt — The lower your debt-to-income ratio is, the more likely it is that a lender will offer you a better interest rate.
• Shop around for better rates and terms — It’s important to check your options to find the best deals and a loan that fits your unique situation.
• Go for a secured loan — Secured loans, or loans that require collateral, are less of a financial risk to the lender and have lower interest rates than unsecured loans.
• Apply with a co-signer — By applying with another person who has a higher credit score, you may be able to secure a lower rate than you would applying alone.
Ready to get your personal loan solution?
Visit your nearest Lendmark branch to discuss your options with one of our loan experts. You can also get started online today.