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Lose Interest: How To Borrow For Less

5 December 2017 No Comment

There are times when we all need to borrow money whether it’s to buy a house or pay for an out of pocket emergency. The problem with borrowing money is that on top of having to pay back that borrowed money you also often have to pay back interest. Many people don’t consider these interest rates but it can soon turn a small debt into a very large debt. When looking for ways to borrow, here are some ways that you can minimise the amount of interest you pay.

Keep a good credit score

Many lenders will determine the type of loan you can take out depending on how good your credit score is. If you have a bad credit score, you may only be able to take out high interest loans. Cleaning up your credit score could allow you to take out lower interest loans and pay less in the long run. You can repair your credit score by paying off your debts on time and showing banks that you’re trustworthy. Getting on the electoral register and making sure that all your cards and accounts are registered to the same name and address can also improve your credit score. Sites such as https://www.myfico.com/credit-education/improve-your-credit-score/ offer some other ways to further improve your score.

Avoid emergency loans

Emergency loans generally don’t require a credit check, meaning that you’re always granted them. However, these loans have the highest interest rates going (in some cases you could be paying back double what you borrow). Where possible you should try to avoid these emergency loans.

Use credit cards wisely

Credit cards can be another means of borrowing money. However, like loans you should make sure that you’re paying back your credit card debts on time to avoid additional charges. Many credit cards will offer zero interest for an initial period, but this may go up after a few months. Make sure to keep track of these interest rates. Sites like https://www.marketreview.com/credit-cards/ can inform you on all the types of credit card available. It worth spending time shopping around for the best interest rate and perks.

Pay more than the minimum monthly payment

When borrowing, most people only pay back the minimum monthly payment. However, if you’re able to pay off more than the minimum, you can often reduce the amount of interest you pay in the long run. This is especially useful with big long-term loans such as mortgages and car loans.    

Borrow from a friend or relative

You don’t have to borrow from a conventional lender. Borrowing from a friend or family might allow you to forgo interest charges altogether, as well as being able to pay back more flexibly on your own terms. Of course, you’re only likely to be able to borrow small amounts this way, plus failing to pay them back is likely to put strains on your relationships with friends and families.

 

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