Top Tips for Securing Low-Interest Personal Loans

Are you looking for a personal loan but don't want to spend a lot of money?

It doesn't have to cost an arm and a leg to get a low-interest personal loan. There are people out there looking for debtors and loan businesses are highly competitive.

24.6 million Americans currently have personal loan debt. The average interest rate is currently 12.64%.

But…

The vast majority of people are already doing something very wrong when it comes to applying for a personal loan. So as soon as someone needs money, they rush to the bank or to the first ad that pops up on the internet.

In fact, the worst of all that that happens, is that they have no choice but to pay very high-interest rates, and these payments are directly hit their wallet. Every month…

Are you ready for something new?

Don't worry if you're one of those people we just described. We will give you the keys so you can not only get a low-interest rate, but also some tips that you can use in the short, medium and long term.

What You Will Learn

• All the fundaments of Personal Loans Overview

• The most important: why your credit score is everything

• Smart shopping and negotiating strategies

• A guide to red flags and hidden fees

Get to know personal loans overview

Personal loans have become a very fashionable solution in recent years. So much so, that it is considered an option that will solve almost any type of problem.

Although in many ways it is similar to other types of loans, such as mortgages or credit cards, these solutions are different from personal loans.

For example, the advantage of a personal loan is that it is one specific, fixed amount that we pay back in equal monthly installments. It also usually does not have any kind of collateral.

With them you can manage all kinds of debt. From that unexpected bill, or that little something you need but don't know where to get the money. Not only that, but the average personal loan is $11,000 with repayment terms of 2 to 7 years.

The truth is that it is a very competitive market. In the United States there is a debt of $253 billion in personal loans. For that reason, the lenders are in a fight to make us be interested in them.

Your credit score is everything (and I mean everything)

Do you want to know what is the most important thing that is going to make the interest rate that you are going to pay?

Your credit score.

The truth is that the difference between having excellent credit and fair credit could cost you thousands of dollars over the life of your loan. Yes, even differences of 10% or more on the interest rate in some cases.

To access the vast majority of lenders you will need to have a credit score between 580 and 660 at least. But if what we are looking for is to have the best rates, the score should be of 700 or more.

This would be the classification by credit scores:

• Excellent credit: 720 or higher. Access to the lowest advertised rates.

• Good credit: 670-719. Decent rates with most lenders.

• Fair credit: 580-669. Higher rates, fewer options.

• Poor credit: Under 580. Very limited options, very high rates.

What do you do if you do not have good credit? We give you the best news possible.

Don't panic, because there are ways to improve your situation before applying.

Check for errors in your credit report, many people have errors that are weighing down their scores. Also, reduce the debt you already have, especially credit card balances. The ratio of credit utilization has a lot of impact on your score.

The reality is that even a slight improvement in your credit score can save you a lot of money.

The shopping around secret (most people don't do this)

The biggest thing that fascinates me is…

The majority of people usually apply to one or two lenders when they want to apply for a personal loan. In fact, it is as if they were literally throwing money in the trash.

Do you want to know why shopping around is so important? This is because different lenders have different approval criteria, different rates and different fees. The lender may offer you a loan at 15% and another at 10%.

Traditional banks usually have stricter requirements, but may offer better rates to existing customers. Credit unions may offer lower rates, but often require membership. Online lenders have much more flexible requirements.

The first step you should take before anything else is to get prequalified with multiple lenders. Most will do a soft credit check, which will not affect your credit score. Then compare the APR, not just the interest rate. The APR includes the fees and you get the true cost.

One of the things that most people do not know is that flexible chase personal loans can offer competitive rates and terms, especially if you already have a banking relationship. Traditional banks are often more likely to give you a better deal if you already have a checking or savings account with them.

Don't focus on just the monthly payment, a longer term may give you a lower monthly payment but you will pay more in total interest.

Timing and negotiation tricks

The timing of your personal loan application can have a real impact on the rate you get.

Did you know that lenders adjust rates based on market conditions, loan volume, and seasonal factors? Don't wait if you see a good rate.

Many people believe that personal loan rates are set in stone and cannot be changed or negotiated, this is a mistake.

Here's how to negotiate:

Bring competing offers to the negotiation table. If one lender is offering you a 12% rate and another is offering 10%, ask the first lender if they can match the lower rate.

Use your existing relationship as leverage. If you've banked with them for years, say so.

Ask about autopay discounts. Many lenders offer a discount of 0.25% to 0.50% for automatic payments.

Fees to be aware of and red flags

Interest rates may be the most talked about aspect, but fees can really kill the loan's economics.

Keep an eye out for these common fees:

• Origination fees, usually between 1% and 8% of the loan amount. A 5% origination fee on a $10,000 loan means you'll receive $9,500, but you'll pay interest on the full $10,000.

• Prepayment penalties, which punish you for paying off the loan early. Always avoid these.

Red flags to avoid:

• Guaranteed approval regardless of credit. All reputable lenders check credit.

• Upfront fees before disbursement. Legitimate lenders deduct fees from the loan proceeds, they don't charge up front.

• High-pressure tactics. No legitimate lender will make an offer disappear in 10 minutes.

• Rates significantly below market. If everyone is offering 15% and someone is offering 5%, there's a catch.

Smart strategies for different situations

The personal loan strategy must also be adapted to the specific situation in which we find ourselves.

For Debt Consolidation

Look for lenders who will pay creditors directly. Calculate the total interest saved.

Some people get fixated on the lower monthly payment but ignore the longer loan term.

Emergency Expenses

Speed is of the essence during emergencies. Online lenders fund much faster than traditional banks. Don't take the first offer – a few minutes comparing can save you hundreds.

Conclusion

Securing a low-interest personal loan doesn't have to be a daunting or expensive process.

The most important thing when it comes to having a low-interest rate is your credit score. The better your credit score the lower the interest rate will be. Don't forget to shop around between multiple lenders. Focus on the fees not just the interest rate. Don't be afraid to negotiate.

Don't forget: Take the time to secure a lower rate. Over the life of the loan a few percentage points really add up. It will save you thousands.

Personal loan lenders are more competitive than ever, which means better deals for well-informed borrowers.