4 Ways To Reduce Your Interest Rate

tnpsc-economics-questionsPart of what draws many borrowers to crowdfunding is a sense of control over the outcome of their loan. Did you know that borrower behaviour can have a serious impact on a loan’s interest rate?

A few simple behaviors can make all the difference in your loan’s competitiveness — and more competition means a better rate when your application completes. Here are a few ways you, the borrower, can incfluence your rate.

1. Engage with questions on discussion forums.

Potential lenders want to hear from you — whether it’s to get to know you better, to get your feedback on concerns and questions about the loan, or to get your financial information. If you respond quickly and cheerfully to their queries, this will boost confidence and improve the likelihood of securing their support.

2. Provide as much information as you can on your loan profile.

Upload accounts, any awards, and all positive information or data that is going to frame you and your business in a positive light. This is the flipside of number one: Get as much information about yourself and your loan into your profile as possible so lenders don’t have to go digging or turn to the discussion board to find the answers they need to make an informed decision about lending to you. Your page should make clear who you are, what your business is, what the loan is for, and why lenders can trust that their investment will have positive results for them.

3. Show how you benefit the community.

Demonstrate the social good you do, or find another way to show a human side to the business. Crowdfunding is different from other finance models, in part because the lending process feels personal. If you can demonstrate the ways that your business helps people, whether by providing a service people need or advancing a positive value or cause, lenders will respond. Remember that in the end, a lender’s decision isn’t about you, it’s about how the loan makes them — and their wallet — feel.

4. Promote your campaign among family, friends, colleagues and existing customers.

To gain the trust of strangers, first demonstrate the trust of your network. Encourage people who know you best and who have benefited from your business to become lenders in the early days of your loan. The concept of seed funding is critical across the crowdfunding world: Those who get funding in the early days are far more likely to successfully fund the project, while projects that flounder early usually fail. Remember — you’re not just asking for a favour, you’re giving those you know a chance to make a beneficial investment.

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