Want to find the lowest interest rate possible on a personal loan? Learn how to get a rate you didn’t think was possible.
Personal loans are some of the most popular credit facilities in the United States. About 20 million Americans have at least one personal loan, and it’s easy to see why. Personal loans are usually unsecured, meaning borrowers don’t have to worry about putting up collateral.
But then theirs is a catch. Because they are unsecured, interest rates charged on them are a bit higher, climbing to as high as 36 percent annually.
If you’re like most borrowers, you want to get a rate that’s as low as possible. How do you do it?
We’re sharing a couple of effective tips for getting the best rates on personal loans. Keep reading!
Build Your Credit
What’s your credit score?
If it’s bad or poor (below average), getting a personal loan with the lowest interest rate is hardly possible. Since personal loans are unsecured, lenders prefer dealing with borrowers who have good credit. When your credit is bad, your application with either be rejected or you’ll be charged exorbitant rates.
As such, the first step to getting the lowest possible rates is to ensure your credit score is looking the part. If it’s in the red territory, take steps to improve it. Check your credit report for errors, maintain a low credit utilization ratio, and pay off old debts that have gone into collections.
Speaking of old debt, did you know a service like Debthunch can help you. And is Debthunch legit? Read for yourself!
Keep in mind building credit isn’t a quick process, so don’t expect quick results. If you need a low-interest personal loan next week and your credit score is bad, no credit building effort is going to help you within such a short period.
Prioritize Traditional Lenders
Typically, traditional lenders, such as local banks and credit unions, offer the lowest rates on any kind of loan.
However, they have higher approval standards. Your credit must meet their requirements and you ought to have built a business relationship with them. For instance, to secure a loan from a credit union, you must be a member and have a good saving record.
But what if you’re not able to secure a loan from a traditional lender?
Use an Online Comparison Service
Online lenders are gaining popularity by the day. Their approval requirements aren’t as high as those of traditional lenders, and their services are super quick. If you’re approved for a loan today, you’ll have the money in a matter of hours.
However, they charge higher interest rates on their personal loans. This is why you should always use an online comparison service before applying for a loan. These are tools that comb the web to find personal loans with different interest rates. You’ll then be able to pick out the lowest.
You Can Get a Rate That’s Lower Than You Expected
In these economic times, you don’t want to take out expensive loans. You want a loan charging the lowest possible rate. With this guide, you now know what to do in order to get a rate that’s lower than you expected.
All the best and keep reading our blog for more financial tips.