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Step 1
Take steps to improve your credit score quickly. Paying off credit cards and making bill payments on time is extremely important to improving a credit score. Every little increase of a credit score will help you get a better interest rate.
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Step 2
Put money down. Making a down payment on a loan is always a good way to reduce monthly payments and interest rates. If you need a loan for a car, for example, paying 20 percent of the value of the vehicle with a down payment will go a long way toward lowering the interest rate.
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Step 3
Get someone with good credit to cosign the loan. A cosigner is someone who guarantees that a loan will be paid if the borrower does not pay. By getting someone with good credit to cosign, interest rates can be lowered significantly, since the lender has the option of collecting from either party. The downside is that the cosigner is usually a close personal friend or family member who may resent the borrower if he is unable to make payments. Cosigning is common among people with short credit histories, such as students.
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Step 4
Get a personal loan from a friend or family member. Sometimes, if your credit is bad enough, it is almost impossible to get a loan from a normal lending institution. In such a circumstance, asking for a loan from a friend or family member can be a way to get a very low-interest loan, as family and friends will often not charge interest at all. Again, involving friends and family in financial matters can create tension and stress in the relationship; only borrow from a friend or family member if you know exactly how you can pay her back.
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Step 5
Offer collateral for the loan. By offering up a piece of property as collateral to ensure a loan, you can obtain a better interest rate. If someone owns a home or car, for example, giving the lender a legal interest in the piece of properly will allow the latter to sue and potentially size the property in the event the loan is not repaid.
