Maybe you hit a financial snag and had to take out a personal loan. You’re responsible with money, so you’ve made on-time minimum payments. But it’s been awhile since you took out that loan and your credit score has improved. Can you renegotiate your personal loan to get better terms?
If you’re looking to lower your payments, see how you can revise your loan terms to pay less.
1. Check your credit report
While your credit score might look like it’s in decent shape, check your credit report to see if there are any red flags. You can do this through AnnualCreditReport.com or potentially through your bank.
Building a solid credit report doesn’t happen overnight. If you’re building credit from scratch, it could take three to six months to show a solid history. If you’ve recently paid off debt, you might have to wait longer. Accounts that were in collections are on your credit report for seven years.
2. Review your loan terms
Depending on what type of loan you have and the lender you use, you might have a few different choices.
You could renegotiate your current loan to get a better interest rate, but you might end up with a longer term. In that case, you might not be saving that much money.
Refinancing your current loan could also be an option. This is where you take out a new loan to replace the one you have. If your current loan’s terms are locked in, and you can’t renegotiate, look into refinancing.
3. Browse other offers
It’s always a good idea to check out the competition. Do your research by looking through personal loan offers. By shopping lenders, you’ll be able to see how much your monthly payments could be based on your credit score.
In case you can’t renegotiate, you could take out another personal loan to pay off your current one early. If you aren’t facing a prepayment penalty, then you shouldn’t have any issues doing this. But make sure you’re financially prepared for this option. And double-check for any payoff fees before moving forward.
4. Talk to your lender
If you’ve reviewed your credit report, gone over your current loan terms, and even checked out competing personal loans, it’s time to talk to your loan servicer. Your preparation will be helpful in discussing your options.
If your loan is from a bank or credit union, you can probably arrange to meet someone at your local branch. Having face-to-face contact might be helpful in your renegotiation.
Be honest about why you’re looking to lower your interest rate. You could argue that you deserve a better deal, for example, because your credit score is up and you’ve made regular on-time payments.
Many lenders will work with you. So have a target goal in mind. For example, maybe your current APR is at 21.00% and you’d like to get it lowered to 16.00%. Maybe your score shows that it could be as low as 11.00%. Regardless of what the figure is, know what rate you want before talking to your lender.
5. Have a backup plan
Since there’s no guarantee your lender will lower your APR, you’ll need to have a few other options lined up in case plan A doesn’t work out. Here are a few to consider:
Try refinancing: If you can’t lower your interest rate, refinancing your loan might work. See if your current lender will do this or if you need to find another one to refinance your personal loan.
Explore different types of assistance: If you’re experiencing financial hardship, you might be able to qualify for help. For example, SoFi will temporarily pause payments and help you find a new job. Talk to your lender about options for your financial situation.
Pay it off early: Without a prepayment penalty, you’re in a good spot to pay off your loan before the due date. Doing so will allow you to pocket cash that otherwise would’ve gone to interest.
Good credit doesn’t always mean good terms
While more manageable terms sound great, you might not be able to renegotiate your loan terms even if your credit improves. It’s good to be prepared before talking to your loan servicer. Do your research on which lenders have better terms. Regardless of the outcome, you’ll be ready to take out a loan the next time you need one.
Interested in a personal loan?Here are the top personal loan lenders of 2019!
|Lender||APR Range||Loan Amount|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
2 Includes AutoPay discount. Important Disclosures for Payoff.
3 Important Disclosures for FreedomPlus.
4 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
5 Important Disclosures for LendingPoint.
6 Important Disclosures for LendingClub.
All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.95% to 35.89%*. The origination fee ranges from 1% to 6% of the original principal balance and is deducted from your loan proceeds. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at the time of application. The average origination fee is 5.49% as of Q1 2017. In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,025 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months. Borrower must be a U.S. citizen, permanent resident or be in the United States on a valid long term visa and at least 18 years old. Valid bank account and Social Security number are required. Equal Housing Lender. All loans are subject to credit approval. LendingClub’s physical address is: LendingClub, 71 Stevenson Street, Suite 1000, San Francisco, CA 94105.
†Per reviews collected and authenticated by Bazaarvoice in compliance with the Bazaarvoice Authentication Requirements, supported by anti-fraud technology and human analysis. All reviews can be reviewed at reviews.lendingclub.com
**Based on approximately 60% of borrowers who received offers through LendingClub’s marketing partners between January 1, 2018 to July 20,2018. The time it will take to fund your loan may vary.
7 Important Disclosures for Earnest.
8 Important Disclosures for Avant.
* The actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. Funds are generally deposited via ACH for delivery next business day if approved by 4:30pm CT Monday-Friday. Avant branded credit products are issued by WebBank, member FDIC.
** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33
* Important Disclosures for Upgrade Bank.
Upgrade Bank Disclosures
** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.
|7.73% – 29.99%||$1,000 - $50,000|
|6.26% – 14.87%1||$5,000 - $100,000|
|6.99% – 35.97%*||$1,000 - $50,000|
|5.99% – 24.99%2||$5,000 - $35,000|
|4.99% – 29.99%3||$10,000 - $35,000|
|5.99% – 18.99%4||$5,000 - $50,000|
|15.49% – 34.49%5||$2,000 - $25,000|
|6.95% – 35.89%6||$1,000 - $40,000|
|6.99% – 18.24%7||$5,000 - $75,000|
|9.95% – 35.99%8||$2,000 - $35,000|