If you are in the looking to find low interest personal loans, you really need to know what your options are. There are many different types of lenders that have very different approaches to lending. There are many different terms that lenders offer. You need to know what to look for when trying to find the best personal loans. While this article focuses on low interest personal loans, this information will generally be transferable to other types of loans as well.
Most Important Loan Criteria
If you are looking for a loan, there are many different options available to you. There are three things to keep in mind when looking for a personal loan: how much do you want to borrow; how much can you afford to pay each month; how good is your credit. Let’s look at each of these issues.
How Much Do You Want To Borrow?
If you are looking for a personal loan, how large of a loan are you looking for. Are you looking for a short term personal loan for $500 or $1500 to help make ends meet? Are you looking to borrow $5000 as a debt consolidation loan? Are you looking for a $25,0000 loan to buy a new car? Perhaps you are looking for a $250,000 mortgage to buy a new house.
Personal loans are usually unsecured loans that do not have much (if any collateral). As such, lenders typically aren’t looking to offer significant loans of this nature. Therefore, lenders are usually only willing to offer personal loans for a few hundred to a few thousand dollars.
If you are looking for more money to buy a car, buy a home, open a small business, you would not be in the market for a personal loan. If you looking for one of those types of loans, you can get more information about those types of loans by searching the Internet. Simply go to your favorite search engine and enter the term you are looking for, for instance small business loans, or low interest mortgage.
Repayment Period For Low Interest Personal Loans
When you shop for low interest personal loans from any type of lender, you will need to make periodic (usually monthly) payments on your loan. Loan repayment periods can vary considerably. Personal loans from traditional lenders may offer you one to five years or longer to repay your loan. On the other extreme, payday loans usually need to be repaid quite quickly, usually within a month or so. Some payday loan networks, like 100 Day Loans might offer you slightly longer terms, but that depends upon your credit worthiness.
How Credit Worthy Are You?
It is very important to know how good or how bad your credit score is. When you submit a loan application, one of the first things most lenders will do is find out what your FICO score is. Your FICO score tells whether you have been good or bad at repaying your debts, historically. If you have defaulted on loans in the past, or you have missed any payments, or are late making payments to utility companies, credit card companies, etc., your FICO score will erode. The lower your FICO score, the worse the terms will be on your loan. If your FICO score gets too low, most traditional lenders will not be willing to loan you money. You will be deemed a bad credit risk. In those circumstances, you will only be able to obtain loans for bad credit risks, and have to seek out online payday loans.
Personal loan interest rates are dependent mostly on your FICO score. The higher your FICO score is, the lower your personal loan interest will be. We can not stress this enough. Do everything that you can do improve your credit score.
What Is Your Credit Score?
Do you know what your credit score is? You can obtain a copy of your credit score information from the three credit reporting agencies: Equifax, TransUnion, or Experian.
Low Interest Personal Loans From a Bank
Probably the first place you should look for a loan is from a traditional bank. Provided that you have good to excellent credit, most traditional lenders would be willing to offer personal loans. The first bank you should inquire with is your own bank – the bank where you do your day-to-day banking. If they turn you down, or if you would like to shop around for better rates with other lenders, check the major banks first. It’s easy to check with those banks. Again, just go to the search engines and enter terms like, Chase Personal Loans, or Wells Fargo Personal Loans. You can go to each of the individual banks and check out their rates individually. However this can be time consuming, An easier way is to go to one of the one stop loan shops. Good examples are bankrate.com where you can find the best rates that lenders are currently offering. You could also go to a lending network, like Lending Tree. They will shop you loan for you and find the best rates and best terms to suit your budget..That is definitely easier that applying for Chase personal loans and Wells Fargo personal loans one at a time.
Low Interest Personal Loans From a Credit Union
Today, many people are members of credit unions. Credit Unions are an excellent source of personal loans. Low interest loans are their specialty. The rates available from your credit union will usually compare quite favorably against traditional lenders. If your company offers you the opportunity, you should definitely give them a call and see what terms they offer.
Low Interest Personal Loans From a Credit Card
Obtaining cash from a credit card company is easy. Trying to obtain low interest personal loans from credit card companies is near impossible. Perhaps you believe that the interest rate that you are paying on your credit card balance for securing goods and services is high. Well, it might be. However, the personal loan interest rates from the credit cards companies is considerably higher. Credit card companies charge extraordinarily high rates for cash withdrawals or personal loans.
The interest rates presented by the credit card companies are often considerably higher than they are for personal loans from traditional lenders. Therefore, shopping at the credit card companies for cash should not be the first place that you go for a loan. Try to find a loan from a traditional lender before considering credit card loans.
Low Interest Personal Loans Via Peer to Peer Lending
Another good option is peer to peer lending. If you are unfamiliar with this type of loan, it is essentially borrowing money from other individuals or small businesses. There are people who act like banks and make loans to people in need. They make low interest personal loans to those people who are requesting loans. Like traditional lenders, they tend to spread their risk around. The way it is done with these lenders is that each person making loan will loan you a small portion of what you are looking to borrow. So if you are looking for a $5000 loan, it is possible that 100 different lenders will each loan you $50. You don’t have to worry about paying each of them back individually, the peer lending websites handle all of that for you. You just make one, monthly payment.
As with traditional lenders, the interest rates that you pay via peer lending are closely correlated to your FICO score. The better your FICO score, the lower your interest rate will be. Personal loan interest rates through peer lenders are frequently amongst the lowest that you will be able to get anywhere. Borrowing money this way is relatively new. Most peer lenders will not loan money to people with bad credit scores. You usually need to have a good to excellent credit score in order to borrow money through these sites. It is very hard to find peer to peer lending for bad credit risks.
Peer Lending Recommendation:
We recommend that you consider Prosper. They offer fixed Rates as low as 6.38% APR You can find these and several other peer lending sites by searching the Internet. We strongly suggest that you look into one or more of these peer to peer lending websites. If you would like to get a loan from Prosper, Click Here
Low Interest Personal Loans For Payday Loan Lenders
Probably the very last option that you should consider when shopping for low interest personal loans are signature loans. Signature loans (another name for payday loans) tend to offer the least favorable lending terms. Personal loan interest rates through these lenders are among the highest allowable by law. The repayment terms also tend to be far less favorable. You usually have to repay the loans, in their entirety very quickly – usually by the very next pay day (thus, their name…)
The only people who should even consider this type of financing are those people looking for loans for bad credit risks. People who have good credit should never consider these lending instruments. If you have no other choice, and need cash now, then consider these loans. However, do everything that you can do improve your FICO score so that you can obtain a more traditional loan in the future.
Recommended Low Interest Personal Loans
If you need cash now and are looking for low interest personal loans, first, determine what your FICO score is. This will give you a sense as to what types of loans you could apply for. If you have good to excellent credit consider banking loans like Chase personal loans, or loans from lending networks like Lending Tree. You might also want to check the rates for personal loans at your Credit Union or consider peer lending.
If you do not qualify for these loans and are looking for loans for bad credit risks, like signature loans or credit cards, do whatever you can to make these loans as small as possible and pay them back as quickly as you can. Low interest personal loans are usually reserved for those with good credit scores.
- Charge you late fees
- Send your account to a collection agency
- Report your information to a consumer reporting agency, which may negatively affect your credit score
- Offer to renew, extend or refinance your loan, which may cause you to incur additional fees, charges and interest