5 ways to borrow money as cheaply as possible

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While many people find the idea of ​​debt daunting, there are still benefits to borrowing money. On the one hand, it can help you get closer to your financial and personal goals. Let’s say you want to own a home but can’t afford to shell out $600,000 for a house; a home loan can help you move forward with the purchase even if you don’t have the ability to pay the full price in cash.

Of course, there are some considerations you need to take into account when it comes to borrowing money, as there are a number of factors that can actually make it more expensive.

Below, Select shares five tips to keep in mind so you can borrow money cheaply.

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1. Improve your credit score to take advantage of lower interest rates

Interest rates can make borrowing more expensive – the higher the rate, the more expensive it will be to take out that loan or borrow credit.

Each lender has their own range of interest rates for their loan and credit products. The rate you receive depends on your creditworthiness, which is determined by your credit score.

When you apply for a new line of credit or a loan with a lower credit score, you will likely receive a higher interest rate because the lender views you as a higher risk, making it more expensive for you to borrow money. A higher credit score usually gets you a lower interest rate, which makes borrowing money more affordable.

Although there are a variety of loan and credit products that cater to people with poor credit scores, it is in your best interest to work on improving your credit score before submitting your applications – if you don’t need money urgently and you have time to improve it.

Paying your bills on time is the single most important thing you can do to boost your credit score. You should also try to keep your debt balance low and check your credit report regularly so you can challenge any potential inaccuracies that could lower your score.

Credit monitoring services such as Experian can help with this – its *Experian Boost™ is completely free and allows you to connect select utility and telecom accounts to your Experian credit report. By linking your bills, such as your monthly cell phone service and your Hulu subscription, you can boost your credit score when the feature picks up positive and on-time recurring payments.

Experian Boost™

On Experian’s secure site

  • Cost

  • Average increase in credit score

    13 points, although results vary

  • Affected credit report

  • Credit score model used

2. Sign up for automatic payment

If you are considering different lenders for a personal loan, you may have noticed that some of them offer a discount for using autopay, which automatically takes payments from your linked bank account and applies them to your bill. Autopay essentially lets you avoid falling behind on loan payments since you won’t have to remember to manually transfer money each month.

Because it’s very unlikely that you’ll miss a payment when using autopay, some lenders, such as SoFi, LightStream and Marcus of Goldman Sachs – offer 0.25% APR discount just for using the feature. Even though 0.25% might not seem like a lot at first, the money you save over months and years of interest payments certainly adds up.

3. Make sure your payments are never late

Most lenders will charge a fee for late or missing payments, whether it’s a fixed amount or a percentage of the amount you owe that month, which means it could be very costly.

Late payments can also lower your credit score, which will make it more expensive to get a future loan or line of credit. Signing up for autopay is a convenient way to avoid accidentally making a late payment or missing one altogether. If you don’t want to use this feature, just mark your calendar each month or set reminders on your phone to pay before the due date.

4. Pay your credit card bill in full each month

Not paying your full Your credit card balance at the end of your billing cycle means you’ll likely be charged interest on top of your original amount with each passing day. In other words, interest charges make it more expensive to carry your credit card balance.

Since the amount of interest you pay will depend on the balance you owe, the higher your balance, the higher the interest you will be charged. In some cases, this can mean a significant amount of money added to what you already owe each month.

If accumulating interest charges prevent you from permanently repaying what you borrowed, consider using a 0% APR credit card to pay them off. These credit cards usually offer an initial term of 12 months or more during which you will not be charged interest on your monthly payments. This way, you can transfer an existing balance on that credit card and pay it off during this initial period when no additional interest accrues.

We have classified the U.S. Bank Visa® Platinum Card and the Citi Simplicity® Card among the best 0% APR credit cards for balance transfers and new purchases. The US Bank Visa Platinum card offers an interest-free introductory period for the first 20 billing cycles on balance transfers and purchases (after, 15.24% to 25.24% variable APR; all transfers must be made within 60 days of account opening and are valid for the first 20 billing cycles), while the Citi Simplicity Card offers an introductory period of 21 months with no interest on balance transfers from the date of the first transfer and 12 months without interest on purchases from the date of account opening. (after, 15.49% to 25.49% variable APR; all transfers must be made within the first 4 months.).

U.S. Bank Visa® Platinum Card

On the secure site of US Bank

  • Awards

  • welcome bonus

  • Annual subscription

  • Introduction AVR

    0% for the first 20 billing cycles on balance transfers and purchases

  • Regular APR

    15.24% – 25.24% (Variable)

  • Balance Transfer Fee

    Either 3% of the amount of each transfer or $5 minimum, whichever is greater

  • Foreign transaction fees

  • Credit needed

Citi Simplicity® Card

  • Awards

  • welcome bonus

  • Annual subscription

  • Introduction AVR

    0% for 21 months on balance transfers; 0% for 12 months on purchases

  • Regular APR

  • Balance Transfer Fee

    5% of each balance transfer; $5 minimum

  • Foreign transaction fees

  • Credit needed

5. Apply to lenders who offer different programs to save money

These days, it’s not uncommon for lenders and fintech companies to offer special discounts to members or new borrowers to help them save money when taking out a loan. Often the only requirement is that you become a member or are already a customer of the lender.

For example, SoFi members who are looking for a mortgage can get $500 off their loan when they apply for a SoFi Mortgage. In addition, when you buy a house through the SoFi Real Estate Centerwhich is powered by HomeStory, you can receive up to $9,500 in cash back.


  • Annual Percentage Rate (APR)

    Apply online for personalized rates; fixed and adjustable rate mortgages included

  • Types of loans

    Conventional loans, jumbo loans, HELOC

  • Terms

  • Credit needed

  • Minimum deposit

To make borrowing as cheap as possible, check what types of discounts lenders offer and consider interest rates and fees that may be charged.

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*Results may vary. Some may not see an improvement in scores or approval ratings. Not all lenders use Experian credit reports, and not all lenders use scores impacted by Experian Boost.

Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff only and have not been reviewed, endorsed or otherwise endorsed by any third party.

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