Although the credit crunch has significantly diminished the borrowing power of consumers, the lending well isn’t completely dry just yet. While lenders still want to lend money to you, you will likely need to search harder and dig deeper to get better loan rates, especially if you have less-than-perfect credit. In addition, knowing what influences interest rates across the board can help you to negotiate a better deal the next time you need to take out a new loan, and understanding what is involved in your current loan can help you to refinance your car title loan or other loan for better terms.
In general, lenders look for proof of stable income. If you were only working part-time when you applied for the loan, showing proof of full-time employment or additional income might convince the lender to lower your rates. In some cases, you might be better off making a larger down payment, depending on the type of loan, or borrowing less money so that you can get a loan more suited to your financial situation.
Also, the importance of a good credit score and profile cannot be stressed enough. Many borrowers walk into a financial institution without having the slightest idea about their credit worthiness, so make sure that you either have a solid score or you are actively taking steps to increase your score in order to get better loan rates. Obtain copies of your credit report from all three bureaus and check carefully for any inaccuracies or derogatory remarks. Correct them to the best of your ability before reapplying for better rates.
While refinancing is also always an option for those looking for better rates, if you’re searching for a loan for the first time, keep in mind that it’s in your best interest to obtain as many quotes from lenders as quickly as possible, typically within a 10-day period. This lets the credit bureaus know that you’re on the hunt for one particular loan and not just multiple lines of credit that will ultimately lower your credit score due to too many inquiries.