Ways To Get Affordable Interest Rates On Quick Loans

Qualifying for affordable interest rates is always a matter of concern among borrowers. Despite a stellar credit rating, according to data, many people are precluded from lower interest rates. While it is a deeply ingrained belief that credit history should be up to scratch to obtain lower rates, it is not the be-all and end-all. Among many, it is one of the factors that decide how much interest you will be paying in addition to the principal.

Lenders weigh your application using multiple parameters, and borrowers who meet the criteria are offered less expensive deals. Apart from your credit history, they peruse your income sources, the amount of debt you owe, the types of credit you have opened, and a credit utilisation ratio.

Quick loans are small loans whose repayment period do not last more than a year. As they are aimed at helping tide you over during unforeseen expenses, the loan size is not more than €1,000. Many lenders require the settlement in fell one swoop on the due date. It could be quite challenging to discharge the debt because subprime loans come with high interest rates.

Qualifying for inexpensive,quick loans in Ireland is not a cinch and they charge high interest rates. It is partly because they are unsecured and hence lenders cannot repossess any assets of yours to liquidate it to recoup lent money and partly because they are generally aimed at subprime borrowers.

Ways to achieve lower interest rate deals

Your credit score, a three-digit number, speaks volumes about your payment behaviour, but lenders are keen to fetch your credit file information rather than the score, which is typically for your reference only. Lenders use their own formula to calculate the risk involved in lending you money. A higher risk means a higher interest rate and vice-versa. Whether you are looking to apply for quick loans or an instalment loan, you may qualify for the best loan rates in Ireland using the following ways:

1. Boost your credit score

No matter how conveniently you could get the nod for a loan with a bad credit rating, it is always suggested that you improve your credit report before applying for the loan. Though it is not the only factor, it can make or break it.

In the absence of a good credit rating, you will be presumed to be a borrower with high default risk. On no account would a lender be disposed to lend money to someone with an impaired credit history in the past. To ameliorate your credit score, use the following tricks:

• Avoid owing too much debt. While applying for a loan, a lender would check a debt-to-income ratio. A high debt-to-income ratio will work against you.
• Pay off your debts on time. Late payments will not bring your credit score down ifyou settle the dues within 30 days from the default. However, it should not be continuous.
• Keep an eye on your credit report information. Unidentified accounts might reflect in your credit file as a result of identity theft.
• Do not run outstanding balances on your credit card. It must have been paid off before credit reference agencies are informed of your balance.

It will take some time to fix your credit rating. How long it takes depends on how bad your score is.You cannot reverse the damaging impact of missed payments and late payments in the past, but they will not influence the lender’s decision much if you demonstrate responsibility in your demeanour.

2.  Keep your debt-to-income ratio low

The debt-to-income ratio is not a determinant of your credit score, but it plays a paramount role in deciding the size of the loan and interest rates. The ratio reflects how much debt you owe against your income. Ideally, the debt-to-income ratio should not be beyond 30%, but maintain it at 25% to avail yourself of better interest rates.

If your credit score is not up to snuff and you need to borrow money, your chances of being approved are slim. If somehow you manage to have your application approbated, you will end up with very high interest rates. Therefore, it is enjoined that you dedicate your efforts to improving your credit score.

But improving your credit history could take a long time, and in the interim, if you come across some unforeseen expenses, you will struggle to be accepted. In this case, you can improve your chances of being approved by clearing all dues. If you do not owe any debt or very little money at the time of applying for quick loans, your lender will find you less risky.

3.  Do not run the balance on your credit card

Keep an eye on your credit card balance. Before the grace period expires, you should clearly settle the whole account. Running a minimum balance on your credit card will not only charge interest but it will increase your credit utilisation ratio.

Further, it is worth noting that you should discharge your credit card balance before your credit card issuer informs credit bureaus of your balance. If the balance is reported before you settle it, your credit score will significantly plummet.

4.  Borrow less amount of money

Quick loans are generally small loans, and yet you might be approved for up to €5,000. As the repayment length is not long, the size of the monthly instalment will be a shade bigger. If your credit score is already poor and you cannot wait to get it fixed to borrow money, you should try to borrow a smaller amount. It will reduce the risk of the lender.

The final word

The first step to getting affordable interest rates on quick loans is to improve your credit score. In addition, you should keep your debt-to-income and credit utilisation ratio lower. The lower, the better. As these loans are quite expensive, borrow a small amount of money.