Are you paying too much interest on your loans? When borrowing money, it’s easy to overlook interest rates, however if you’re not careful interest can build up in the long run and cause real financial troubles. Here are just several ways to spend less on loans.

Build a good credit score

If you haven’t got a good credit score, you could find that you’re ineligible for most low interest loans. Whilst there are loans out there for people with a bad credit score, these almost always come with high interest rates. By building your credit score before taking out a loan, you can gain access to cheaper lending options. Good spending habits such as paying all your bills on time and not having too many debts at once can increase your credit score. There are also quick credit-builder schemes issued by banks, which could be worth looking into if you want to build your credit score rapidly.

Use a 0% APR credit card

There are credit cards out there that charge no interest – but be wary as these rates tend to only be for a temporary period of about 6 months (some of the best cards have 0% interest for over a year). After this period, the interest rate could be variable. You’re best off taking out these cards, paying off your credit card bills before the zero interest rate ends and then taking out another 0% interest credit card. Credit cards are best suited for small out-of-pocket expenses.

Don’t miss your repayments

If you fail to pay back a loan or credit card bills on time, your interest rates will usually rise. By budgeting carefully and paying off the minimum debt repayment every month, you can avoid this from happening.

Throw extra earnings at your debts

By paying back more than the minimum repayment, you can also lower your interest rates in some cases. You can do this by throwing any extra earnings at your debts – this could be birthday money, a work bonus or winnings from a competition.

Many good lenders will reward you with lower interest rates for paying more than the minimum repayment. If anything, you’ll pay your debt off sooner, resulting in less interest overall. Check out Creditninja.com for flexible loan options.

Know when to refinance

It’s possible to refinance your debts in order to pay less interest – this involves paying off a high interest loan with a lower interest loan. People commonly do this with mortgages, helping them to get better deals in the long run. If you’re struggling to find lower interest loans, you can always get the help of a mortgage company or a broker. Be careful of taking out loans that allow you to extend your repayments – whilst you could be paying your debts off in smaller instalments, you could end up paying more in the long run.

Borrow from your friends and family

Another option of course is to skip official lenders altogether and consider borrowing money from friends and family. Your friends and family aren’t likely to charge interest and may even allow you to pay back the money over a more flexible time period. Of course, you shouldn’t take advantage of this flexibility as it could put a strain on your relationships with these people.