Most Americans will need to make a purchase on credit at some point in their lives, whether for a home, college education, vehicle or even an emergency expense. All of these scenarios require a loan, which come in a variety of shapes and sizes. It takes a bit of strategy to ensure you’re getting the best rate, so read on for tips on each type of loan.
Mortgages
If you want a great loan rate on a home mortgage, look for a fixed-rate loan that locks in your interest rate for the duration of the loan period. Having a stable income and a FICO score of at least 740 means you’ll qualify for the lowest fixed-rate options, and those who can also show cash savings will secure excellent rates.
Student Loans
The ideal student loan is one that is federally backed and subsidized, with fixed interest rates that are not reliant on your credit score. To get the best rates, you’ll need to apply early through the Free Application for Federal Student Aid (FAFSA). If you need a private student loan on top of your federal aid, credit matters. Do your best to clean up your credit history before applying, and shop around for the best deals for your situation.
Auto Loans
The important thing to know about auto loans is that lenders use risk-based pricing. So, the higher your credit score, the lower your loan rate. If you don’t have stellar credit, you may find your best option through a credit union loan. Some manufacturers also offer rate specials on particular vehicle models, so be sure to ask about this option as you shop around.
Credit Cards
Many people keep a credit card on hand for emergency expenses, but some credit card companies charge exorbitant interest rates. Whether your card has a fixed rate or a variable one, card companies can change your rate with as little as 45 days’ notice. Luckily, most are also trying to retain customers, so calling and requesting a lower interest rate can often yield positive results.
Before you apply for your next loan, consider your strategy. Use the above advice to achieve the lowest loan rates in order to save money over the long-term.
Image via Flickr/Moly Menit
