Loans don’t come in a one-size-fits-all. Your financial situation may call for a loan that’s larger or smaller and a repayment period that is longer or shorter. However, there’s one variable that remains desirable regardless of the circumstances: a low interest rate.
You may think that the interest rate you’re given is out of your control. But, it’s actually based on your credit report (a record over which you have some control), and there are things you can do to ensure that you get a better deal.
Your credit score tells a lender how likely you are to pay back a loan, a factor that determines whether or not you qualify for a loan as well as what kind of interest rate you’re offered. To ensure a high credit score, you need to spend responsibly and make sure that you always make your payments in full and on time. For a more detailed explanation of how you can improve your credit score, read our blog on How to improve your credit score.
Some financial institutions and loan sharks set interest rates and loan repayment terms for less responsible customers. If you apply for a loan at one of these institutions, your unique credit risk profile won’t be taken into account, and you’ll probably receive a high interest rate. Seek a lender who takes your individual risk profile and unique financial situation into account and matches the interest rate to your risk level.
Old Mutual believes that responsible lending means scoring borrowers accurately and trusting customers who have practiced responsible spending behaviour. To ensure that our customers don’t pay more interest than they should, we look at their financial situations in their entirety.
When you’re looking for a personal, you shouldn’t only be trying to get a better interest rate. There are other factors that also play a role in the cost of a loan, and you need to make sure you’re looking for the features that will serve your needs. To learn what to look for in a personal loan, read our blog article How to choose a personal loan.