The worst part of taking out a personal loan is facing the dreaded interest rate.

Even once you acknowledge the fact that you are paying for the privilege of borrowing money, the idea of giving your hard-earned cash to a bank is not any easier to accept.

The good news is that there are ways you can reduce the amount of interest you have to pay.

Get a Co-Signer

While it is admirable to want to do everything on your own, do not be foolishly stubborn about it. If you know someone who has better credit than you do and who might be willing to co-sign for your loan, then there is no harm in asking. If adding a co-signer can save you a few percentage points on your interest rate, it is worth doing. As long as you make your payments on time, you are not only getting help, but you are helping your co-signer’s credit as well.

Check Your Credit Report

Many people simply apply for a loan and figure their credit score is what it is. What they do not realize is that their credit reports could contain mistakes that are lowering the FICO scores. Additionally, there could be negative items on there that you can have removed if you file the right paperwork. Get a copy of your credit report from all three of the major credit bureaus and make sure you do not have any false negative items lowering your score.

Shop Around

While you do not want too many inquiries on your credit report, you can check out various loan companies online and get an idea of what of rates they are offering. You can get personal loans from or Lending Tree and both could have very different interest rates depending on their underwriting guidelines. Different lenders determine credit-worthiness using different criteria, so do not just assume that they are all the same.

Consider Peer-to-Peer Lending

Websites like Prosper offer a marketplace that connects private lenders with borrowers. The websites do have credit-worthiness criteria, but they are often less strict than traditional banks. You can also submit documentation such why you need the loan, your budget plan for paying it back and other important information that may sway the lender in your favor. If he or she is impressed with your paperwork, you may receive a better interest rate than a bank can offer.

Go To a Local Bank

Customers usually have a better chance getting a loan from a company that wants to retain their business than one that is completely unfamiliar with them. It also helps have you have a direct deposit and a checking account with the bank because they can verify your income more easily. If you do not have any luck with your own bank, try applying at a small, local bank in your area. Sometimes lesser-known banks are willing to offer better deals to gain a customer.

Ask Your Credit Card Provider

Many credit card companies offer personal loan solutions as well. If you have a good payment history with a credit card company, they might be more inclined to offer you a loan with a lower fixed interest rate. Another advantage to this approach is that one of the company’s loan officers can usually give you a ballpark idea of what kind of interest rate you qualify for without pulling your credit report, which saves you an inquiry on your credit history.

Try Getting a Secured Loan

In many cases, secured personal loans have significantly lower interest rates than unsecured loans. If you can borrow against your 401k plan, your car, your house or some other type of collateral, the bank is taking less of a credit risk so you will get a better interest rate. The only downside to this approach is that you must be confident that you can repay the loan or you risk losing your collateral.

In many cases, personal loans do come with a high interest rate. Some personal loan rates are even as high as credit card rates. However, do not just settle for a high rate loan without exploring all your available options. Be wary of loan officers that tell you that you cannot do any better elsewhere. Do not just take their word for it. Compare rates from different companies and find out for yourself, if the first company truly is offering you the best rate, then it will still be available after you have explored your other options.

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