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If your credit has significantly improved since you first took out a loan, you might be in a good position to change your loan’s rates and terms. One way to do this is by calling up your lender and renegotiating the terms. But if you ‘d rather avoid an argument — or are short on time — you have a few more options that can help you save.
Can I get different terms on my loan if my credit improved?
Maybe, though it depends on your lender, the type of loan you have and your negotiating chops. You might have the most success if you have an unsecured personal loan, which come with rates and terms that rely more heavily on your credit score. Your lender might be less willing to budge if you have a loan that involves collateral — like a car loan — since the collateral would have already helped you get a lower rate.
How to renegotiate your loan terms in 4 steps
Think you have a chance of getting a better deal? Follow these steps to get started:
Step 1: Check your contract for prepayment penalties.
Before you set out to renegotiate your loan, check to see if your lender charges a penalty for paying off your loan early. If it does, you might not want to renegotiate a shorter term, since you’ll likely have to pay a fee. Focus instead on negotiating down the interest rate.
Step 2: Check your credit score and report.
Many online services, budgeting apps and even some credit card companies offer free estimates of your credit score. Check with a couple places to get a more accurate number.
Also, request a copy of your credit report from one of the three major credit bureaus — you’re entitled to a free copy per year from each. Look over it carefully to ensure it’s error-free. If you spot a mistake, reach out to the creditor to get it fixed before you move forward.
Step 3: Prequalify for a similar loan with other lenders.
Shop around and see what kind of a deal you can get from other lenders with your new-and-improved credit score. You can often do this by filling out a quick prequalification form on the lender’s website. Just make sure it doesn’t involve a hard credit check — this temporarily hurts your credit score and won’t help your case.
If you really can get a better deal with one or more lenders, you have a strong case for negotiating down your rates and terms.
Step 4: Negotiate with your lender.
Now that you have an idea of what you can qualify for, bring your best offer to your lender. If you borrowed from a bank or credit union, consider setting up a meeting in person. That way you can bring documents with you to support your case, and they might be more sympathetic.
Otherwise, call the lender’s customer service line and ask to speak to someone who has the power to change the terms of your loan.
If you have a better offer, they’ll know they’re at risk of losing your business to a competitor. They might be willing to beat their competitor’s offer — or at least match it. But if you had bad credit before — or other factors in the mix haven’t improved — you might be out of luck.
How else can I save on my loan?
Don’t have the time to negotiate? Lender digging in its heels? You might want to consider these two options instead:
Refinance with another lender. Follow steps one through three, but this time go through the entire application rather than using it as leverage. You could refinance your old loan with the new loan. Some lenders might even be willing to handle the process of paying off your old loan for you.
Make extra repayments. Put bonuses, tax refunds and any extra money you come across toward your loan principal to pay it off early.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
You might be able to negotiate down your rates and terms if your credit score has improved significantly since you first borrowed. But there are other ways to get a better deal that might take less effort, like refinancing. Learn more about your options by checking out our guide to personal loans.
Frequently asked questions
Can I negotiate my student loan rates and terms?
You might be able to with a private lender. But federal loans come with non-negotiable rates that are set by Congress. However, you do have the option to change the loan term on your federal loans by choosing a different repayment plan, with no negotiation required.
What's considered a good credit score?
Any credit score above 670 falls into the good, very good or excellent range. But even if your score doesn’t qualify as good, you still might be able to get a better deal if there was a big enough change, like jumping from 550 to 650.
How do I use a cosigner when I renegotiate?
You might have a harder time renegotiating a loan if you applied with a cosigner, since the cosigner’s credit score might have been the main factor in the rates you received. But if your credit score is now higher than when you used a cosigner, you might get a better deal by refinancing it in your name with another lender.
Anna Serio is a lead editor at Finder, specializing in consumer and business financing. A trusted lending expert and former certified commercial loan officer, Anna's written and edited more than 1,000 articles on Finder to help Americans strengthen their financial literacy. Her expertise and analysis on personal, student, business and car loans has been featured in publications like Business Insider, CNBC and Nasdaq, and has appeared on NBC and KADN. Anna holds an MA in Middle Eastern studies from the American University of Beirut and a BA in Creative Writing from Macaulay Honors College at Hunter College, CUNY.
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