Personal loan rates vary widely from one lending institution to another. At the same time, there are a series of terms, conditions, features and benefits to go through. While the interest rate looks like the most important consideration, it becomes worthless if other terms cannot match your necessities. With all these, you should also know that rates might vary between customers. If you have seen ads and special offers, you have probably noticed already that they advertise for a range. You will never get a 10% interest rate. Instead, you get an interest rate between 7% and 15%. They leave room for misinterpretations. Now, how do you turn these rates in your favor? What are the best ways to shoot the lowest ones?
Reshape your credit
Your credit score is often responsible for the interest rate. This is one of the three major factors that can influence your application. First, you need a good credit score. Second, you need a proof of income. Third, you might need a down payment. However, the down payment is overlooked in personal loans. It becomes important in large loans though. Although this is not a general rule, having a credit score of over 740 (out of 850) will normally give you the lowest personal loan rates. You can qualify with a lower score as well, yet the rate goes higher. Sure, it depends on how much money you require too.
If your credit is not in the best shape, seek some copies and correct all the potential errors. You might find it surprising, but there are actually plenty of errors. Most people are not aware of them. Reshaping the credit and correcting errors may take more than a month, so begin this venture early. Avoid getting too many reports or they will show up on the credit. They may also influence it negatively.
Explore the market
Before checking your necessities and personal loan rates, make sure that you do your homework. Ask lenders to pre approve you. Find out how much money you can get. Do not always accept terms and conditions. Remember that there is always room for negotiations, especially if you refuse the initial offer. Different lending institutions come with different offers, so make some comparisons. You can compare deals over the Internet as well, yet these web comparisons are not always accurate. After all, most offers are customized to your necessities, so they are likely to differ from what you find online. You have to move fast as well. By the time you research the entire market, new offers may kick in, so you have to start all over again.
Apart from the personal loan rates, keep an eye on the fees and small prints as well. Is there anything unclear? Ask about it. Fees can be tricky and may add up. You might pay fees for credit reports, insurances, brokerage services and so on. There are more things to remember when getting a loan though:
- The possibility to negotiate
- Fixed, variable or mixed interest rates
- Adjustment features