BLOG

5 Tips to Help You Get Low Interest Personal Loans

Low interest personal loans can be collected for a variety of different reasons. For example, you can use these loans to consolidate debt, make any necessary home improvements, and some may even use it for investment opportunities. If you are looking into getting a loan, here are five tips on how to choose a personal loan that offers you low interest rates:

Build establish good credit.

You must acquire a credit report before applying for a low interest personal  loan. By law, you are allowed one free credit report a year, just visit annualcreditreport.com to get a detailed summary using all three of the major credit bureaus (Equifax, Experian, and TransUnion). It is a known fact that most individuals who display financial responsibility are the ones with the best credit score. Annual percentage rates correlate to your score at the time of application; the better your score is, the better rates you get. Lenders often give higher percentage rates to those with low credit scores because it is determined that there is more risk involved with this category of individuals.

Consider taking out a secured loan.

Most lenders who offer secured loans will offer lower annual percentage rates. This is purely because your inability to repay comes with collateral so the lender has less to lose. These secured loans should only be utilized if you are looking for a temporary fix to a short-term problem. Boat and car titles are more common assets to offer up for a loan, they also come with less risk when compared to home equity loans. More often than not, individuals find it easier to pay off these loans since only a small amount is borrowed from the lender. You also have the ability to refinance these loans, and most title lenders are lenient when it comes to payment. Another advantage of these loans is the borrower’s ability to prepay.

Informal loans.

To get a loan with minimum to no risk, you can always ask your friends or family for a loan. In many circumstances, these individuals are most likely to provide you with small loans, and you will not have to worry about the annual percentage rate of what you borrow. There is also more flexibility when it comes to these loans in regards to payment and how much. This is also good if you are looking to improve your existing score. Most people are not aware that applying for a loan with a bank can result in negative points to your score. Realistically, this off-the record loan is ideal under any circumstance.

Use credit unions instead of banks.

Consider using a non-profit lending institution when it comes to getting a loan. They are allowed to give consumers a lower annual percentage rates unlike banks. Banks do not make as much money on personal loans, so the interest rates can be greater than you expect. However, some regulations that are used to govern banks may still apply to credit unions.

Take out a credit card.

There are financial institutions that offer up cards with 0% annual percentage rates. They are widely known as balance transfer credit cards and are used to pay off any debt you have collected. Your debts are placed onto this new card and will give you more than enough time to pay them off without having to pay for additional interest. Some cards can offer you 0% APR for up to 21 months. There may be a transfer fee depending on the card you chose to get. You can always ask the bank you apply with what their policies are.