To secure a low-interest loan, prioritize maintaining a strong credit score (ideally 740+), as lenders reward higher scores with lower rates. Opt for fixed-rate loans over adjustable-rate options to avoid future rate hikes. Seek government-backed programs like FHA or VA loans, which offer competitive rates with minimal down payments. Compare multiple lenders using online platforms like LendingTree or Bankrate to leverage competitive offers. Additionally, reduce your debt-to-income ratio by paying down existing balances and refinancing high-interest debt.

Maintaining a high credit score is critical because lenders view it as a measure of financial responsibility, directly correlating with loan approval and interest rates. For example, the Federal Reserve reports that consumers with credit scores above 740 typically qualify for rates 1-2 percentage points lower than those with scores below 620. A 2023 study by the Consumer Financial Protection Bureau found that 43% of borrowers who shopped around for loans received at least one lower offer, averaging a 0.5% rate reduction. Government-backed loans like FHA loans (for home purchases) or VA loans (for veterans) often provide lower rates due to government guarantees, even with lower credit requirements. For instance, FHA loans currently offer fixed rates around 6.5-7.5%, while conventional loans for similar credit profiles average 7-8%. A debt-to-income ratio below 43% is preferred, as lenders assume lower repayment risk, and exceeding this threshold can increase rates or disqualify applicants. These factors collectively reduce borrowing costs and ensure long-term affordability.