How to Get a Low Interest Rate on a Debt Consolidation Loan — Tally (2023)

Justin Cupler

Contributing Writer at Tally

June 28, 2021

Credit card debt can pile up quickly, leaving you wondering how to manage it all. Luckily, you don’t have to do it all on your own — there are financial tools that can help. One such tool is debt consolidation when you take out one loan to pay off multiple debts.

A debt consolidation loan not only rolls all those payments into one, making repayment easier to manage, it also gives you a fixed term to pay off credit card debt, and it often comes with a lower interest rate than a credit card.

To maximize the benefits of this financial tool, you’ll want to get the best debt consolidation loan interest rate because a lower interest rate means the loan will cost you less throughout its term. Below, we'll cover debt consolidation loan interest rates and how to lower yours.

Debt Consolidation Loan Interest Rates

Debt consolidation interest rates vary based on multiple factors, but most will be tied to the federal reserve rate, which is the interest rate banks charge each other for overnight loans.

Lenders then add a set number of percentage points to the federal reserve rate to develop their base interest rate, which will be the bank’s interest rate to borrowers with excellent credit. The additional percentage points are called the margin.

Lenders then create credit tiers, or buckets, for borrowers with less-than-excellent credit from that base interest rate. Each lender will have different margins for each credit tier or bucket, leading to the wide range of rates you may see between lenders.

As of June 17, 2021, the average debt consolidation loan interest rates for the different credit tiers, according to NerdWallet, are as follows:

(Video) Does Debt Consolidation Really Do Anything?

How to Get Low Debt Consolidation Interest Rates

How to Get a Low Interest Rate on a Debt Consolidation Loan — Tally (1)

Of course, getting the lowest debt consolidation loan interest rate is the goal. The lower the interest rate, the less it will cost you to pay off this debt. However, with credit card interest rates sometimes exceeding the 24% mark, almost any debt consolidation loan could save you money when you’re consolidating credit card debt.

Here are some methods to try to get the lowest possible debt consolidation loan interest rate.

Building an excellent credit score

An excellent credit score is the first step toward getting the lowest possible debt consolidation interest rate. Unfortunately, building a great credit score is a long-term process that may take months or even years to complete.

But if your credit score is teetering just below the next credit tier, you may save on your interest rate if you delay taking out that debt consolidation loan until you build your FICO credit score to that next tier. The difference in interest paid between the tiers can be significant, making it worth the delay.

To build your credit as quickly as possible, focus on avoiding late payments to keep a positive payment history and put as much extra money as possible toward your credit card debt to lower your credit utilization. Your payment history and credit utilization are the two most important factors — they make up 35% and 30% of your FICO score, respectively.

During this time, avoid applying for any new credit, as this will result in hard credit checks, which can lower your credit score.

Getting a co-signer

If qualifying for a loan is proving difficult, and you don't have time to build your credit score, adding a co-signer with good credit may help you get a lower debt consolidation interest rate. A co-signer takes on equal financial responsibility for the debt consolidation loan, so the lender has reduced risk, resulting in a lower interest rate.

(Video) Tally: Debt Consolidation Review

The downside is the co-signer may also see their credit score fall because this new loan may appear on their credit report. Also, if you miss a loan payment, the co-signer may get a negative mark on their credit profile, which could impact their creditworthiness when they apply for future financing.

Shopping around

Like any consumer item, different lenders offer different pricing and interest rates on their debt consolidation loans. So, don't be afraid to shop around for the best possible rates. Be open about the other offers you have, as some companies will meet or beat competitor’s offers to earn your business.

With a wide range of online lenders to choose from, you can quickly fill out multiple online applications.

Shortening your repayment term

The longer you take to repay a debt, the more interest a lender will typically charge. For example, a lender may offer you three loan terms to choose from: a 24-month loan at 10%, a 36-month loan at 15%, or a 48-month loan at 18%.

While your monthly payment may be lower on the longer-term loans, the reduced interest on the 24-month loan could save you cash throughout the loan.

Lowering your loan amount

In some cases, a high loan amount may push your debt-to-income ratio too high, resulting in more risk and a higher interest rate. Lowering the loan amount could put you into a more positive debt-to-income range and result in a lower interest rate.

If a lower loan amount leaves you without enough cash to pay off all your high-interest credit cards, you can first pay off the highest-interest ones while making regular payments on the remaining debts. Once you pay off the first debt consolidation loan, you can always take out another to consolidate any remaining debts.

Considering a personal line of credit

A personal line of credit may be another option to help you get out from under credit card debt with a lower interest rate. The Tally credit card payoff app, for example, offers as low as 9.9% APR on its line of credit.1 Plus, Tally accepts FICO credit scores as low as 660, so even borrowers with fair credit may be eligible for a lower interest rate.

On top of offering a low interest rate, Tally also manages all your credit card payments for you. You make only one monthly payment to Tally, and it distributes that payment to your credit cards using the debt avalanche method — paying the highest-interest debts first.

Using your home's equity

How to Get a Low Interest Rate on a Debt Consolidation Loan — Tally (3)

Homes usually appreciate, meaning their value grows over time. So, as you pay down your mortgage and your home value grows, you create home equity — the difference between your home's value and the total mortgage balance on the home.

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You can tap into your home's equity by taking out a home equity line of credit (HELOC) or a home equity loan (HEL) to consolidate your debt. Because these loans are tied to your home, they often come with low rates — far lower than any debt consolidation loan.

While most other debt consolidation loans are unsecured debt — there is no collateral for the lender to repossess if you default on your payments — a HELOC or HEL makes your house the collateral on your debt. If you default on the loan, the lender can foreclose on your property. Also, HELOCs and HELs often include costly lender fees, like an origination fee, which may eat into your interest savings.

Opting for autopay

Check the loan terms of your proposed debt consolidation loan carefully. Some lenders offer interest rate reductions for specific actions. One relatively common tactic is offering a small interest rate reduction — typically about a half of a percentage point — for activating autopay.

Autopay allows the lender to automatically deduct the minimum payment from your bank account every month.

If you have a predictable income, that half a point in savings can save you interest charges over the life of the loan.

Checking out balance transfer credit cards

If your high-interest debt balance is relatively low, it may be worthwhile checking out balance transfer credit cards. A balance transfer card offers a low annual percentage rate (APR) for a fixed period — typically six to 18 months. In some cases, these cards offer rates as low as 0% APR.

If you can transfer all your high-interest debt onto an 18-month 0% APR balance transfer credit card, you can pay off that debt throughout the 18-month promotion without paying a penny of interest.

This seems like a fantastic deal, but there is a small catch. These cards often charge a 3 to 5% balance transfer fee. So, if you transfer $1,000 onto the balance transfer card, the credit card company will add a $30 to $50 fee.

Joining a credit union

Credit unions have a wide range of valuable benefits for their members, including free and discounted financial advising and loan offers with attractive interest rates. Check out a few local credit unions to see which you qualify to join then review their personal loan options and lines of credit.

You may find the lowest rates are at this credit union, but you need to account for the fees associated with being a member of the credit union to get the true cost of the loan. These fees could negate any interest savings from a great line of credit or a personal loan rate.

For example, if you had a three-year loan offer from a traditional lender to consolidate $5,000 in debt at 11% interest, you’d pay $892.97 in interest over the loan term. Say a credit union offered you the same loan but with an 8% interest rate. You’d pay just $640.55 in interest — that’s $252.42 in savings.

However, if the credit union charges you $15 per month to be a member, you’d pay $540 in fees over the three-year period. Your total cost — the interest plus the credit union fees — for the lower interest rate would be $1,180.55. That means you’d actually save $287.58 by sticking with the higher interest rate from the traditional lender.

(Video) The Truth About Debt CONsolidation

Simplify Your Payments and Get the Lowest Interest Rates

How to Get a Low Interest Rate on a Debt Consolidation Loan — Tally (4)

A debt consolidation loan has wide-ranging benefits, including reducing the number of monthly payments you make, putting variable interest rate credit cards on a fixed rate and lowering your overall interest charges.

If you want to get even lower debt consolidation interest rates, there are plenty of ways to go about it, including:

  • Improving your credit score

  • Getting a co-signer

  • Shopping around with multiple lenders

  • Shortening your repayment terms

  • Lowering the loan amount

  • Checking out a personal line of credit

  • Using your home's equity

  • Opting for autopay

  • Using a balance transfer credit card

    (Video) Tally App 2023 Review, Consolidate Your Credit Card Debt

  • Joining a credit union

While not every option will work for your financial situation, you can choose the ones that do and enjoy a lower debt consolidation loan interest rate on top of all the other benefits.

1To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate.

FAQs

How to Get a Low Interest Rate on a Debt Consolidation Loan — Tally? ›

Tally will potentially offer you a loan with a lower APR than what you are paying on your credit cards. Tally lines of credit are only used to pay down existing credit card balances. Once you're approved, Tally transfers higher APR balances to the line of credit, then makes payments on existing balances.

Will tally lower my interest rate? ›

Tally will potentially offer you a loan with a lower APR than what you are paying on your credit cards. Tally lines of credit are only used to pay down existing credit card balances. Once you're approved, Tally transfers higher APR balances to the line of credit, then makes payments on existing balances.

What is tally's interest rate? ›

Tally app at a glance
Minimum credit score580.
APR7.90% - 29.99%.
FeesTally+ membership fee: $300 per year or $25 per month.
Credit line amount$2,000 to $25,000.
Time to fund after approvalImmediately.
1 more row
Oct 19, 2022

How to negotiate a lower interest rate loan? ›

Here are five ways to negotiate your mortgage rate:
  1. Compare rates from multiple lenders.
  2. Improve your finances.
  3. Ask for a rate match.
  4. Use discount points.
  5. Bonus: Lock in your rate.
Feb 17, 2023

Can you pay off tally early? ›

Tally requires its own minimum payment, as a card company would. But you can pay as much on top of that as you want, which the company puts toward your highest-rate debt. Tally charges no origination, annual, prepayment, late or over-the-limit fees. This is no giveaway, though.

How to change the interest rate in Tally? ›

Configure bank ledgers with advanced parameters.
  1. In the Ledger Alteration screen of the Bank ledger, press Enter on Activate interest calculation. ...
  2. In the Interest Parameters screen, press F12 (Configure) and set Use advance interest parameters to Yes.
  3. Specify the Rate along with Interest Style and Applicability.

Why is my Tally payment so high? ›

If the value of your Tally revolving line of credit exceeds your debt, Tally will make your monthly payments higher, so you're paying off more than the minimum on your cards.

What is a fair interest rate on a loan? ›

A good interest rate on a personal loan allows for manageable monthly payments over the loan's term. The lowest rates are usually around 6%, and the highest go up to 36%. The best interest rates go to good- or excellent-credit borrowers (690 or higher score) with debt-to-income ratios below 40% and steady income.

Is Tally a fixed rate? ›

Tally lines of credit come with an APR between 7.90% and 29.99% APR, although this rate is variable and based on the prime rate just like credit card interest rates.

What is the minimum payment for Tally? ›

How much does Tally cost?
Membership tierCost
Tally membership$0
Tally Basic$0, but you pay interest on your line of credit. APRs range from 7.90%-29.99% (as of May 4, 2023)
Tally+$300 per year
Apr 3, 2023

How do you beat interest rates on a loan? ›

  1. Ask Your Bank to Lower Your Interest Rate. Many mortgage holders have been watching their mortgage repayments climb each month in the mistaken belief there is nothing they can do about it. ...
  2. Refinance your Home Loan and Make the Switch. ...
  3. Ask for Help. ...
  4. Revisit Your Budget. ...
  5. Seek Financial Counselling.
Mar 24, 2023

Does asking for a lower interest rate affect credit score? ›

Asking for a lower interest rate will not directly impact your credit score. However, if the card company has to do a hard inquiry into your credit history to determine whether you qualify, that will drop your credit score by a few points for up to a year.

Can you get a lower interest rate on an existing loan? ›

You may be able to lower the rate of your current loans or your credit cards, especially if your credit score has improved or if overall interest rates have gone down since you initially applied for the loan. Make sure to consider any fees that might be associated with refinancing.

How can I get out of Tally? ›

How do I close my Tally Account?
  1. Log into your TallyMoney App.
  2. Tap the user profile icon located in the top right-hand corner of the home screen.
  3. Scroll down to the bottom and tap “Close account"
  4. Enter your passcode if biometrics/Face ID is not enabled.
  5. Follow the onscreen prompts to close your account.
May 1, 2023

What happens when you cancel Tally? ›

Monthly subscription fees are not refundable. If you cancel your Tally Premium account, or if you do not notify Tally of changes to the bank account linked to your Tally Premium account, your enrollment in Tally Premium will be discontinued and any payments scheduled through Tally Premium will be cancelled.

Can you cancel Tally at any time? ›

Cancellation may be initiated in either of two ways: (1) You may use the “Cancel My Account” option in the “Account & Legal” section of the Tally App or (2) You may Email help@meettally.com from the email address associated with your Tally account and state that you wish to cancel your Tally Premium account.

What are the two types of interest in Tally? ›

Interest can be calculated on the basis of Simple or Compound Interest. With Tally. ERP 9 you can obtain reports on interest calculated based on the configurations made. Interest is calculated on outstanding receivables or payables.

How to change the rate in Tally prime? ›

To modify the rate per unit in the voucher, press F12 (Configure) and set the option Modify all fields during entry to Yes. Henceforth, you can modify the rate fields of all the sales invoices with price levels until you change them in F12 (Configure) of the sales invoice.

How can I lower my payments? ›

You may be able to shrink monthly debt payments by refinancing your car or home, recasting your mortgage, consolidating your debt, using a balance-transfer card or appealing to the creditors.

What happens if you miss a Tally payment? ›

A late fee may be charged — up to $29 for first-time missed payments and up to $40 for repeated missed payments. Your annual percentage rate (APR) may increase temporarily (this penalty APR is typically charged until you have made several on-time payments again).

How can I increase my Tally credit limit? ›

Set credit limits for multiple ledgers
  1. Go to Gateway of Tally > Accounts Info. > Ledgers > Credit Limits .
  2. Select the required group of ledgers from the List of Groups to set credit terms. ...
  3. Set Credit Limit , Credit Period , and Check For Credit Dates During Voucher Entry in the Multi Ledger Limit Alteration screen .

Is 7% a bad interest rate? ›

A good personal loan interest rate depends on your credit score: 740 and above: Below 8% (look for loans for excellent credit) 670 to 739: Around 14% (look for loans for good credit) 580 to 669: Around 18% (look for loans for fair credit)

What is a too high interest rate? ›

A high-interest loan is one with an annual percentage rate above 36% that can be tough to repay.

Which bank has the lowest interest rate? ›

Comparison of Personal Loan Interest Rates offered by Leading Banks & NBFCs
LendersInterest Rate (p.a.)Processing Fee (% of loan amount)
State Bank of India11.00% – 15.00%Up to 1.50% (Rs 1,000 – Rs 15,000)
HDFC Bank10.50% onwardsUp to Rs 4,999
Punjab National Bank10.40% – 16.95%Up to 1%
ICICI Bank10.50% onwardsUp to 2.5%
31 more rows

Which of the following is a disadvantage of using Tally? ›

Retrieving the data after forgetting the user ID and password is a bit difficult. Fewer, data security is also one of the disadvantages. It is complex software for beginners to use.

Do I need to buy Tally every year? ›

Your Tally license has lifetime validity. But you have to renew the subscription to enjoy the value and time-saving features. Compared to the benefits it offers, the amount spent on a renewal is very affordable.

Do banks use Tally? ›

In Tally ERP9, three types of bank accounts are offered - Cash Credit Account, Overdraft Account, and Saving Account. Therefore, businesses can easily manage payments made through Tally banking.

Is Tally easy for beginners? ›

Is tally difficult to learn? No, the tally is not difficult to learn. It is simple accounting software which helps in the accounts management. Students belonging to commerce as well as non-commerce fields can use it easily.

What gives lower interest rates on loans? ›

Interest rate levels are a factor in the supply and demand of credit: an increase in the demand for money or credit will raise interest rates, while a decrease in the demand for credit will decrease them.

How do I request a reduction in interest rate? ›

Call your card issuer and ask

First, try directly contacting your credit card issuer and asking for a lower interest rate. It's important to be prepared so you know exactly what it is that you need from your issuer.

Where should your credit score be to receive the lowest interest rate? ›

Generally speaking, borrowers with credit scores of 760 or higher get charged the lowest interest rates. On conventional conforming loans, which must adhere to Fannie Mae and Freddie Mac guidelines, a 780 may qualify you for a slightly lower rate—though it depends on your down payment amount.

Why is my APR so high with good credit? ›

Those with higher credit scores pose a lower default risk to issuers, and they tend to land better interest rates. Even if you have a higher interest rate and carry a balance, you can pay less interest on your credit card debt if you make payments whenever you can.

Can you refinance a debt consolidation loan? ›

Refinancing for debt consolidation works just like any other refinance. You'll have to apply, qualify, go through the closing process, and pay closing costs. You should shop around when refinancing a mortgage to make sure you get the best rates and terms possible.

Can you get a lower interest rate without refinancing? ›

There is one way you can get a lower mortgage interest rate without refinancing, however. A mortgage modification allows you to change the original terms of your home loan due to a financial hardship. Your lender may adjust your loan by: Extending your loan term.

What temporarily lowers the interest rate on a loan? ›

A temporary buydown lowers the interest rate to a certain percentage, which then increases each year until it returns to the original rate. Common temporary buydown terms are 2-1 and 1-0, where the first number is the rate reduction you receive in the first year and the second number is the rate reduction for year two.

How long does Tally take to pay? ›

Tally immediately pays eligible borrowers' credit card balances once they accept Tally's offer of a line of credit. Tally does not charge origination fees. There are no late fees. There are no prepayment fees.

How does Tally make money? ›

We make money by charging interest on the amount you borrow from us. We aim to keep interest rates as low and fair as possible. There's a strong chance your Tally interest rate will be much lower than your credit card APRs and if it isn't we will only make payments when we can save you from paying a late fee.

How to split Tally back up? ›

Split Company Data
  1. Go to Gateway of Tally > F3 : Cmp Info. > Split Company Data > Select Company .
  2. Select the required company from the List of Companies .
  3. Enter the required date in the Split from field. The Split Company Data screen appears as shown below.
  4. Press Enter to split the company data.

Can I change my Tally membership? ›

You can change your plan while you are on trial or upgrade your account subscription.

Does Tally go on your credit? ›

Does Tally hurt your credit score? A. When approving lines of credit, Tally performs a soft credit check, which will not impact your score. Your credit score could get hurt if you select You Pay rather than Tally Pays and you fail to make an on-time monthly payment to the card issuer.

Does Tally show up on credit report? ›

No hard inquiry: Tally requires a credit check to see whether you're eligible for its line of credit. This would typically affect your credit report, but Tally does a soft inquiry, which doesn't impact your credit. Nothing out of pocket: Tally's line of credit on the Tally+ membership has a $300 annual fee.

Will a lower interest rate lower my payment? ›

That's why getting a lower interest rate or extending the term of your loan may help lower your monthly payments. Be sure to keep an eye on the total fees and costs of borrowing because extending the term or refinancing your loan could increase monthly interest payments and the overall expense you pay over time.

Is it possible to lower interest rates on credit cards? ›

You may be able to lower your credit card's interest rate simply by asking your card issuer. While card issuers aren't required to lower your rate, they may be willing to, especially if you have a long history of making on-time payments or if your creditworthiness has improved since you opened your account.

How to get creditors to lower interest rates? ›

Call your card provider: Contact your credit card issuer and explain why you would like an interest rate reduction. You could start by pointing out your history with the company and mention your good credit or on-time payment history.

How much do you pay Tally a month? ›

Tally's basic plan also comes with no annual fee, no origination fees, no balance transfer fees, no late fees, and no prepayment fees. However, their paid plan will cost you $300 annually charged to your credit line at $25 per month.

How much does 1 point lower your interest rate? ›

Each mortgage discount point usually costs one percent of your total loan amount, and lowers the interest rate on your monthly payments by 0.25 percent. For example, if your mortgage is $300,000 and your interest rate is 3.5 percent, one point costs $3,000 and lowers your monthly interest to 3.25 percent.

What makes interest rates lower? ›

Supply and Demand. Interest rate levels are a factor in the supply and demand of credit: an increase in the demand for money or credit will raise interest rates, while a decrease in the demand for credit will decrease them.

Will interest rates go down in 2023? ›

Along those lines, organizations like Fannie Mae and the Mortgage Bankers Association forecast that the average rate on 30-year fixed-rate mortgages will decline throughout 2023, continuing into the first quarter of 2024.

What is a good credit card interest rate? ›

The APR you receive is based on your credit score – the higher your score, the lower your APR. A good APR is around 20%, which is the current average for credit cards. People with bad credit may only have options for higher APR credit cards around 30%. Some people with good credit may find cards with APR as low as 12%.

How do you beat interest rates? ›

How to get a lower rate
  1. Switch to a zero percent credit card offer. “Even if you have a lesser credit score, zero percent balance transfer offers are still abundant, some with up to 21 months with no interest,” Rossman says.
  2. Consider a fixed-term personal loan. ...
  3. Improve your credit score. ...
  4. Ask for a lower rate.

Is National Debt Relief a legit company? ›

Yes, National Debt Relief is a legitimate company accredited by the Better Business Bureau and currently holds an A+ rating. It also has IAPDA (International Association of Professional Debt Arbitrators) accreditations for all of its arbitrators and an AFCC (American Fair Credit Council) membership.

How can I lower my interest rate without refinancing? ›

There is one way you can get a lower mortgage interest rate without refinancing, however. A mortgage modification allows you to change the original terms of your home loan due to a financial hardship. Your lender may adjust your loan by: Extending your loan term.

Can you ask creditors to reduce debt? ›

It is possible to negotiate directly with creditors and settle your debt for less than you owe, but you may want the help of a professional. A quick counseling session from a certified credit counselor can help you discover your options and choose the right path forward.

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4. is The Tally App a Scam | Interview w/ Bethy Hardeman from Tally | Part 2
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