What is a personal loan?
Sometimes you need large money to cover certain expenses like home renovation, medical bills payment, debt consolidation or you just want to take care of college fees, personal loans are the best option available in such situations.
Personal loans may be unsecured loans that come with a high-interest rate and don’t require collateral as a guarantee or secured loans that offer the best personal loan rates but are secured against collateral such as your jewelry or other personal properties.
Best personal loan interest rates come with secured fixed personal loans in which you repay a certain amount over a predetermined period of time so you don’t have to worry about the unpredictable variation in the interest rates. Variable interest rate loans are also available but come with fluctuating interest rates meaning that the interest rate could go up or down over the time period.
We, at MatchFinancial, with our lending partners Upgrade and Prosper, help you get personal loans at lowest possible interest rates.
Interest rate and APR
Interest rate is simply the cost of borrowing and is added to the original loan amount you are borrowing. Secure fixed personal loans generally come with interest rates ranging between 6% and 36%. The best loan, worth considering, comes with the lowest interest rate and is the least expensive. If you have a high credit score, you can even get interest rates lower than 6%.
Annual percentage rate (APR) is usually greater than or equal to interest rate and includes interest rate as well as other fees and costs such as discount points, broker fee, closing fee, and rebates.
SoFi personal loans offer an affordable interest rate combined with benefits such as unemployment protection meaning that if you lose your job, you can temporarily pause your payments. They offer loans at interest rates as low as 5.99%.
SunTrust bank, through its online division LightStream, offers you low interest rate loans starting from 3.99% but only for the borrowers with solid credit ratings. You can borrow up to $100,000 from LightStream.
Good peer pressure puts Prosper ahead of most old school lenders. They use a peer-to-peer lending approach and offer APR ranging from 7.95% to 35.99% at loan amounts between $2000 and $40000. They do not lend money to the borrowers with bad credit.
You can borrow an unsecured loan up to $35,000 with a fixed interest rate ranging from 7.99% to 35.97% at online platform of Upgrade. But you can enjoy an interest rate as low as 5.99% if you have a fair credit rating and repay this loan over 36 to 60 months.
If you have a bad credit rating, you should consider Avant as a solution for your financial problems. You can get up to $35,000 at interest rate starting as low as 9.95% which is quite impressive.
Find best personal loan interest rates
Different banks, credit unions, and online lenders offer personal loans at different interest rates. You can enjoy the lowest interest rate by putting up some effort and doing your homework. You should know what you need the loan for and make an idea of your future financial status.
Check your own bank
Whenever you need to borrow a loan, your primary choice should be your own bank in which you have an active account because certain banks offer lowest interest rate loans to their existing customers only. Look for other cheap and affordable options if your bank can’t help.
Before applying for a loan or taking a decision, do some research, contact multiple lenders, gather details and choose the lender which offers you the lowest rate at easy terms and conditions. MatchFinancial and lenders we work with are a potential option to consider for the best personal loan interest rate.
Increase credit score
Increasing your credit score should be your first priority if you want to get a low interest rate personal loan. If you want to do so, consolidate your existing debt and pay your bills on time. Never discard old credit cards unless expired because length of your credit history would impact your credit score.
Make big installments every month so that you could clear the loan as soon as possible and this will result in lower extra charges in terms of interest rate. Before borrowing the loan, make sure there is no prepayment penalty to avoid any inconvenience in the course of time.
Put up collateral
Always opt for secured loans with fixed interest rates because doing so will provide you a lower interest rate than unsecured loans or loans with variable interest rate. Lender will feel more confident and may further relax the interest rate and other terms and conditions of the loan if you put up collateral against the loan, which will ultimately benefit you. You may be at a risk of losing the collateral if you don’t calculate pros and cons
Lowest loan term
Shorter loan term is an easy way to lower your interest rate provided that you are financially strong enough to pay higher monthly payment. Lenders offer lowest interest rates to the borrowers who are willing to repay the loan in a shorter term.
Be wary of hidden fees
That said, it is always plausible to avoid borrowing a loan as much as you can unless you are in a financial crisis but don’t have other considerable alternatives.
Even in emergency conditions, take advice from a trusted friend or family member and do extensive research before making a decision. Ask your lender to provide you with complete detail of terms and conditions of the loan and check if there are any hidden fees.
Inquire if they are going to charge origination fee, closing fee, late payment fee, and prepayment penalties and try to negotiate.