Learn How to Reduce Personal Credit Interest
At many times in people’s lives it is necessary to have an amount of financial capital to make some projects real and move forward in a few steps. However, it is not always possible to have all the financial resources at hand to get some of these projects off the ground.
Thus, personal credit plays a fundamental role in this aspect, however, since it is a credit operation, it is subject to interest charges. But do you know how to reduce interest on a personal credit? To know how to proceed, check out right now in this article that Credit Sheet has prepared especially for you!
Why the charging of high interest?
Personal Credit is an activity in which banks and other financial institutions lend a certain amount of money to individuals who do not have all the amount they need and, therefore, these institutions are exposed to the so-called “credit risk”, which is the possibility of default.
Thus, in order to hedge against this credit risk, banks and other financial institutions tend to charge high interest rates on personal credit operations in order to compensate for possible losses of financial capital.
However, it is possible to adopt some measures that make it possible to reduce the interest rates practiced by the financial market and thus have better conditions on your personal credit.
Here are the main ways to lower high interest rates on personal credit.
Some people may not have available at that time of need the financial amount they need, but have other assets (vehicle, property, government bonds, shares, etc.). This is a very common scenario in times of economic volatility.
This way, you can pledge assets by entering into a personal credit agreement, so that the financial institution will have coverage and assurance that it will get back the amount you made available. For this reason, the collateral enables the negotiation of a cheaper and favorable interest rate for those who need credit, which creates a positive environment for all involved.
Have a good score
The score is a score of each person and that is linked to the Individual Individual Taxpayer Register (CPF). This score refers to an individual’s ability to honor their financial commitments. The higher the score , the better it will be to get a lower interest personal loan, as the financial institution will have this data to analyze the propensity of credit risk exposure.
In order to maintain a good score you should avoid default signals and restrictions, open your positive registration with a credit analysis institution, pay your bills on time and avoid the high rate of compromise of your revenues in relation to your expenses.
Negotiate interest reduction with early installments
In addition to credit risk, interest is directly tied to the time when the borrower will repay the installments of personal credit. That is, the higher the number of installments, the higher the interest rate, as the borrower will spend more time in possession of the lender’s financial amount.
Thus, negotiate with the financial institution the reduction of interest in the event of early payment of installments, since you will have less time with the possession of the financial amount.
Once you are sure of this possibility of interest rebate, make the correct financial planning for the settlement of personal credit earlier than expected, anticipating the payment of the last installments of the contract and have greater reduction of interest.
Give preference to Fintech
Fintech is a startup that uses technology and the online environment to promote financial products, including personal credit. This market approach is a great alternative to lowering interest rates on a personal loan, so these companies charge lower interest rates than traditional institutions.
Portability of your personal credit
Despite being a practice present in our country for some years, few still know the possibility of portability of financing and loans. This allows you to migrate your credit operation to an institution that has a lower interest rate than the institution that originated this operation.
This ensures you continue payments at a fairer interest rate that is in line with your plans.
By adopting these strategies, you will surely succeed in reducing the interest involved in the personal loan agreements that you have or may be in force.
Make payroll loan service available
Another way to achieve interest reduction is to make payroll loans available to your employees. As this is a form of credit where the installment discount is taken directly from the payroll, financial institutions feel safer and offer much lower and attractive interest rates.
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