Personal loans have some of the highest interest rates of any debt, but there are some things that you can do to get a low interest personal loan. By following these tips, you could end up with a low interest personal loan that can help fund an emergency, a trip, or whatever you need!
Shop Around
Every lender has different interest rates and terms. It’s like shopping for anything expensive. You want to go to several different shops before you choose the perfect price. Personal loan companies can be as diverse as retail stores, so ask around and get quotes from many different groups. Checking various personal loans online may not affect your credit score, so you can check several lenders without repercussions.
Read the Fine Print
Most personal loan companies make it easy to find the amount you can borrow, but the interest rate and additional fees may be a little harder to locate. Before signing anything, you need to check the fine print to be sure you’re getting the best deal. The lowest advertised rate may not be the APR you receive. There may also be additional fees, which can supplement for the low APR.
Know your Credit Score
A low interest personal loan depends heavily on your credit score. Only by knowing your credit score can you actually get a low interest personal loan. A free credit score is easy to discover if you haven’t already got a free annual credit report through AnnualCreditReport.com. Another method is using Credit Karma to get an estimated score from TransUnion and Equifax—two of the major credit reporting bureaus.
Improve your Credit Score
As mentioned before, a low interest personal loan is based on your credit score. The higher your FICO rating, the better APR you’ll get through the personal loan companies. Even personal loans online depend on your credit score. Improving your “creditworthiness” is the best way to drop your APR and get a great low interest personal loan without too much hassle.
Don’t Borrow Too Much
Only borrowing what you need will decrease your APR overall. You may receive shorter terms and higher payments, but a low interest personal loan could be in your reach. Sure you could use the extra money, but the more you borrow, the higher the interest rate and term. Paying your loan off over 60 months rather than 45 means you’ll pay more in interest over the life of the loan.
Choose Automatic Withdrawal
Automatic withdrawal is much easier for personal loan companies, so many offer benefits if you choose it. However, it can be more difficult for customers because they may forget and be charged fees for overdrawing or failure to pay. On the other hand, personal loan companies may also charge a fee if you pay by check.
Fixed or Variable Rates
The ultimate way to get a low interest personal loan is through a fixed APR. At first, the variable rate may seem like a good decision because the original interest rate is low. Unfortunately, this rate can rise over time and increase to be much higher than the fixed APR. A fixed interest rate allows you to determine your monthly price without any variation.
