For many of us, the interest rate on our personal loan is something we have very little control over. There is a strong possibility that your personal loan provider was your ONLY option at that time, so you took what you could get. Most involvement in interest rate setting by the consumer revolves largely around whether or not we are going to risk a floating or a fixed interest rate. There is also the inconvenience of being limited to only those banks or finance companies willing to risk a loan on you.

Generally speaking, the interest rate on a loan will be less if the loan is secured. Usually, the best forms of security are homes and cars, mainly because of the high values and easy disposal aspects. Homes and vehicles usually have a higher monetary value than most other assets in the home and can be sold to cover any outstanding debt to the bank or finance company.  Some of us don’t have either of this and, consequently, the interest rate on your loan can be horrific.

But once you have managed to score one, the groundwork has now been established for other banks and/or finance companies to capitalize on. Beware the hire purchase agreements, the various credit card schemes and any other “Buy Now- Pay Tomorrow” scheme to draw you in and increase your debt. But there is hope for our bank balances.

Here comes the part where you, as a consumer, can get back some control and look at ways to diminish that overall interest component. One of the easiest ways and often forgotten is to apply for a debt consolidation loan. This takes your existing debt into account and usually means a lower interest rate applies if you are successful. You can even apply through the same provider your current loan is with.  Sometimes this can make it easier, sometimes not. It really all depends on your banking history with that company.

Even better to look for are low interest debt consolidation loans. These can be time-sensitive loans meaning a fast repayment is required to receive the lowered interest rate. Try and look for one that is open in terms of the length of repayment options available. And remember that you already have a loan and you have proven you are big enough to have one, so now you can shop around for the better deal.

Do shop around.  Don’t be fooled into taking the first one to say “Yes,” because first isn’t always best and that’s probably why you need a debt consolidation loan in the first place. Not to mention that there are no guarantees that a bank will give you what you ask for just because it makes sense to you.  You need to consider the value of security and what it can get you.  Secured loans will nearly always command a lower interest rate and a higher credit limit.  Look out for promotions too, like banks offering lower rates to transfer your credit card balance over to them. These can save you a whole lot of money just for taking the time to fill out a few forms. Whatever you choose to do, there are definitely a lot of options out there, so take your time and get the best rate for you.

By Jasmina