Can You Reduce the APR on a Personal Loan?

People use personal loans to cover a variety of expenses, from medical bills to car repairs. Like credit cards, mortgages and automobile loans, personal loans are charged interest. The rate of the interest is known as APR, which stands for annual percentage rate. The APR on a personal loan can sometimes be reduced.

Check Your Credit

Before asking the lender to reduce the APR on your personal loan, check your credit report. A lender is less likely to lower the APR of your personal loan if you have poor credit because poor credit indicates a higher risk of defaulting on the loan. High-risk borrowers are almost always subjected to higher interest loans. You can get free credit reports from all three credit reporting bureaus once each year by going to, the only website endorsed by the United States Federal Trade Commission.

Connect with Your Lender

Call your lender. If you borrowed your personal loan from a bank or credit union, you can also make an appointment to speak in person with a personal banker or representative. Ask the lender if he would be willing to lower the APR on your personal loan. If you have a history of paying bills on time and good credit, the lender will be more likely to work with you. The national interest rate environment will affect how willing the lender is to lower your APR. If interest rates are trending down, the lender might be more willing to lower your APR.

Be Honest

Don't be afraid to be honest about why you want the APR lowered. Tell the lender if you're struggling financially. Explain that you want to honor your debt and it would be helpful to reduce the APR, which will likely lower each monthly payment. The lender may ask you to write a letter of financial hardship, which should include facts such as job loss, illness or other factors that make it difficult for you to pay a high interest rate. Clearly state your request for a reduced APR on your personal loan in the letter. Your letter of financial hardship should not be too emotional; keep it to the point and factual.

Get Another Loan

If your lender refuses to lower the APR on your personal loan, consider paying that loan off with another loan. Get quotes from other lenders for the best interest rate on a personal loan. If you can get a lower interest rate loan from another bank or lender, it may be a good decision to do so and use that loan to pay off the one with higher interest.


About the Author

Based in Chicago, Annie Wang has been writing since 2008. Her work has appeared in World Architecture News and other online publications. She holds Bachelor of Arts degrees in English and art history from the University of California, Davis.