A loan can either help you improve your business, or it can be a source of misery. Part of what determines whether a loan will be good for you or not is the interest rate. The higher the rate, the more difficult it becomes to repay it. To help you make the most out of a loan, here are 5 tips to obtaining a low interest rate loan in Singapore.
1. Choose your lender wisely
If you have taken out loans in the past, then you know that not all lenders are the same. That’s why it’s good to do some research before you commit to a lender. The best lenders allow for flexible rates, depending on the needs of the borrower. One such lender is credit thirty3. Credit thirty3 is a top moneylender in Singapore. That’s because they take their time to guide people on the best loans, based on their income and project budget.
2. Improve your credit rating
One of the smartest ways to lower your loan interest rates is by maintaining a healthy credit rating. The better your credit rating, the better your chances of negotiating for lower lending rates. One of the best ways to improve your credit rating is by repaying your loans on time. This gives lenders trust in your ability to repay, and they may lower your risk assessment levels. Higher interest rates are usually a reflection of a borrower’s higher risk profile.
3. Go for short-term loans
Unless it is extremely necessary, go for a short-term loan and repay it within the shortest time possible. Long-term loans may look like they have a lower interest rate, but the duration of the repayment will ultimately lead to a higher cost. Besides, with a long-term loan, things can happen along the way, and you may fail in your repayments. This can ruin your future credit profile, and make your future borrowing costs more expensive.
4. Get a collateralized loan
Online loans that don’t require any security usually attract high-interest rates. That’s because the lender needs to cover the risk, in case of default. As such, it makes sense to go for collateralized loans where you offer some form of security to the lender. These loans attract a lower interest rate because the lender has something to fall back on, in case you default on the loan.
5. Negotiate with the lender
Before you get into a loan agreement, you need to talk to the lender and persuade them to lower the rate for you. You will be surprised at how low they can go, if you have some good negotiating skills. When negotiating for a rate reduction, focus on convincing the lender that you are a low-risk borrower. You can easily do this by providing a clearly defined business plan, if you are borrowing to start a business. You can also show them past records of your business earnings, if you have some good ones. No lender will refuse to cut rates for a low-risk borrower. If you have a bad credit score, you may need to accept the higher rate or search online for lenders willing to take a chance on providing you with a loan to grow your business.
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