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How to Get a Lower Interest Rate on a Loan

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AFS is hearing from people who are struggling to manage credit card debt, personal loans and mortgages that are currently at high interest rates. To help address these concerns, we’ve put together a list of some steps people can take to try and bring down rates on existing loans. This can be a challenging process, but if successful, it can save thousands of dollars in extra interest charges. Check out the steps below and remember, you can always call talk to someone about your personal situation. 

  1. Improve Your Credit Score: Just as with applying for a new loan, having a higher credit score can help you negotiate a lower interest rate on your current loan. Focus on making timely payments, reducing credit card balances, and addressing any errors on your credit report to improve your credit score over time.
  2. Research Current Interest Rates: Stay informed about current interest rates for loans similar to yours. If market interest rates have decreased since you obtained your loan, it could be worth contacting your lender to inquire about lowering your interest rate to match the current market rate.
  3. Negotiate with Your Lender: Reach out to your lender and explain your situation. Express your desire to lower your interest rate and provide reasons why you believe you deserve a lower rate, such as improved creditworthiness or a strong payment history. Be prepared to negotiate and potentially provide documentation to support your request.
  4. Consider Refinancing: If negotiating with your current lender doesn't result in a lower interest rate, consider refinancing the loan with a different lender. Refinancing involves taking out a new loan to pay off the existing one, often with better terms such as a lower interest rate. Shop around and compare offers from multiple lenders to find the best refinancing option for your needs.
  5. Look for Special Programs or Offers: Some lenders offer programs or promotions that allow borrowers to lower their interest rates under certain conditions. For example, your lender may offer a rate reduction for enrolling in automatic payments or for making a certain number of on-time payments. Check with your lender to see if you qualify for any such programs.
  6. Seek Assistance from a Credit Counselor: If you're struggling to negotiate a lower interest rate on your own, consider seeking assistance from a credit counselor. A credit counselor can provide guidance on managing your debt and negotiating with creditors to lower interest rates and make your payments more affordable.
  7. Pay Down the Principal Balance: While this won't directly lower your interest rate, reducing the principal balance of your loan can save you money on interest charges over time. Consider making extra payments toward the principal or increasing your monthly payments to pay off the loan faster and reduce the total interest paid.
  8. Explore Loan Modification Options: In some cases, you may be able to request a loan modification from your lender, which can involve changing the terms of the loan, including the interest rate. Loan modifications are more common for mortgages but may be available for other types of loans as well. Contact your lender to inquire about loan modification options.

Remember to carefully consider the potential costs and benefits of any strategy for lowering your interest rate on an existing loan and choose the approach that best fits your financial situation and goals. 

To learn more or speak directly with a credit counselor, visit our website at

Published Feb 12, 2024.