Getting access to cheap finance is one of the best ways for you and your family to save money. If you’re able to get a loan or mortgage with an extremely low interest rate, you’re much more likely to be able to afford investments and other items in the future. American families sign up for expensive financing deals far too often – they end up ruining their futures by being stuck in high-interest debt.
But as the financial industry grows more competitive, access to cheaper financing is becoming prevalent. In addition, Western governments around the world have been giving money away at increasingly low interest rates – meaning lenders have access to affordable capital. In some ways, there’s never been a better time to be borrowing money. But to get low interest personal loans, you need to be aware of how to approach the process. Not everyone is savvy enough to get a loan at the right rate.
This guide is dedicated to helping people who want to get low interest personal loans. We provide our readers with all the tools they need to get the most out of their lending experience. We don’t want borrowers being taken advantage of by predatory lenders. If you have any questions about getting low interest personal loans, make sure to read the rest of this page.
Solid Lending Environment
Families in the United States had taken on record levels of household debt in the lead up to the global financial crisis in 2008. It became apparent that people were borrowing too much. But the problem after the crisis occurred was that people were borrowing too little. No one was investing in the economy, which was leading to further problems in terms of growth and prosperity.
For this reason, the government began to lower interest rates. They wanted the public to have easier access to capital. This way businesses and individuals would drive the economy forward and escape recession. While the economy has recovered quite substantially, the government still wants people to invest money.
Interest rates continue to be extremely low. While some regulations have made it harder to borrow money, the price of capital is extremely low. If you know how to approach the process correctly, you’ll be able to take advantage of this unique time in economic history. Make sure that you’re not overpaying for your financing – look at the market as a whole.
Where Do I Find Low Interest Personal Loans?
The reality is that there are hundreds of different lenders to choose from when it comes to low interest personal loans. You will not be sort of choices in this industry. The emergence of technology in the world of finance has made it much easier for smaller lenders to enter the marketplace. Much of the personal loan industry now takes place online through smaller online lenders.
These lenders compete heavily with one another and therefore offer much lower interest rates. Another benefit to this is that there are many lenders that are willing to work with people from a variety of different credit backgrounds. Most traditional lenders will only want to work with those with solid credit histories.
If you head online, you’ll find that you can easily access plenty of online lenders for personal loans. It’s not hard to find a solid option if you browse the net. These online lenders will also allow you to complete an application in minutes – you’ll receive a decision within moments of submitting the application. This is a great way to get financing quickly if you want speedy access to capital. Some of the new lenders in the industry can even get you your money within 24 hours of approval.
If you have good credit, getting a low interest personal loan should not be much of an issue for you. There are a lot of lenders competing in the industry, which makes it fairly easy to find someone willing to lend you money if you have a solid credit history. If you do have good credit, make sure to shop around for different rates – you have the freedom to choose between a variety of different lenders
As someone with a solid credit history, you also have the freedom to borrow from traditional lenders. These lenders tend to offer low interest rates as they try and loan their money exclusively to those who have reputable credit scores. While applying through a traditional lender can often be more inconvenient than an online lender, it’s a good option for those who are looking for low interest personal loans.
If you don’t have a solid credit score, or you don’t have a long credit history, but you still want to get your hands on low interest personal loans, you have options. There are a few things you can do to try and get low interest personal loans. Some of these methods will have their own risks, so make sure to read about each option extensively before making any decisions. We explore each one of these routes in more detail below.
Secure the Loan
Many personal loans are unsecured, which means banks have no way of seizing any of your assets if you end up defaulting on the loan. This is great for borrowers, as it means that if you can’t meet your financial commitments, you won’t lose any of your other property. The only thing that will be damaged in this case will be your credit score. But this less risky option for borrowers leaves many lenders in a tough position. They want to lend money to people with low credit scores, but they don’t want to risk losing all the capital they’ve lent out because someone decides not to pay them back.
That’s where securing a personal loan comes into play. You can secure the loan against your home or your car, this means that the lender will be able seize this asset should you end up defaulting on the loan. This is much riskier for you, as it gives your lender the right to take away your family’s property. For this reason, you should only secure a loan if you know that you have the financial stability to pay it off on time. If you are able to secure the loan, the bank will offer you a much lower interest rate. This is because the bank knows that they can get their money back by selling your assets. One of the most common ways people get access to low interest personal loans is by securing the loan with their lender.
Another way that people often get access to low interest personal loans is through a co-signer. Co-signers are people that sign the loan with you and guarantee payments. If you end up defaulting on the loan, the co-signer will need to pay the loan or their credit score will also be damaged. It’s a way for you to use someone else’s credit score to your advantage. Many people who are trying to obtain mortgages, but have limited credit history, will get a co-signer to help guarantee the loan.
Because this reduces the risk for the lender, they’re much more likely to offer you a lower interest rate. The only downside is that you are putting the financial health of your co-signer at risk. If they have worked hard to get their credit score to the level it is at, you don’t want to ruin it for them by defaulting on the loan. If you’re close friends or family with this person, you might end up ruining your relationship if you don’t do the right thing.
Benefits of Low Interest Personal Loans
There are a variety of benefits associated with low interest personal loans. But sometimes it’s good to see all the advantages in one easy-to-read spot. If you’d like to know all the reasons why low interest personal loans are a good option, read below.
- Cost – At the end of the day, the primary benefit to a low interest personal loan is the cost of the loan over the life of the term. While interest rates seem small when you look at them in their percentage form, they can quickly add up over the lifetime of a loan. Saving yourself money is the best way to make sure that you can afford to pay off your loan.
- Lower Early Termination – Because the interest rate on your loan is much lower, the fee for early termination tends to be much lower as well. This is a good benefit if you think that you might end up paying your loan off a bit earlier than expected.
- More Reputable Lenders – Lenders that offer good interest rates also tend to be more reputable. Those who offer high interest rates are typically predatory lenders looking to make quick money out of their customers.
The Better the Credit Score, The Lower the Rate
Another factor that will heavily contribute to your ability to get a lower interest rate is the credit score that you have. You should view your credit score the same way that you would view an investment – the more time you put into it, the more reward you will get. But sometimes it’s too late to have a perfect credit score – many Americans have problems with their credit, and it means that they end up paying higher interest rates.
But there are a few things you can do to raise your credit score and ensure that you get a lower interest rate when you apply for credit. Two of these options are explained below.
Pay Off Your Credit Cards
Your credit card balances play a significant role in determining your credit score. If you are able to pay off some of your credit card balances, you’ll find that your score goes up significantly. Credit card companies update information every month, so it should never take more than four weeks to see improvement in your score!
Many credit reports have mistakes in them. If you’ve never looked at your credit report, there’s a high chance that yours has mistakes too. Have a look at your report and see how many mistakes are on it. You can ask the credit reporting body to remove any errors. If you’re unsuccessful, ask a credit repair company.
Avoid Predatory Lenders
Many people enter the borrowing market because they are in desperate need of cash to pay for something. For this reason, there are many predatory lenders operating in the space. They want to try and get desperate people to sign up for high-interest debt. Individuals are then locked into a debt cycle that destroys their finances and their credit scores. This creates further problems down the line, as borrowers are not able to borrow money for important things in their life.
One of the most common forms of predatory lenders is payday loan companies. These companies will charge you up to 400% interest at times. Some charge even higher. Make sure never to sign up for a loan like this. You can find much more affordable financing regardless of your credit score if you just head online and search for personal loans.
Low interest personal loans may sound like a far-fetched dream to many, but they’re more accessible than ever. You just need to know how to approach the subject the right way. If you’re having trouble getting a low interest personal loan, try some of the methods that we’ve outlined in this article. But remember, there are risks involved with securing loans and obtaining co-signers, so be careful.
If you’re having trouble finding a lender you can trust, check out the suggested finance companies on our homepage. We’ve done extensive research to find the best lenders in the market. We enjoy giving our readers a head start when it comes to finding a great lending partner to work with. You are sure to find a great low interest personal loans company if you start with the list that we’ve provided!
Christine has a solid background in personal finance as she spent the last eight years working at one of the biggest banks in the US. She managed her own team of financial advisors that helped hundreds of people with their financing needs. Her innate understanding of different financial products and loans helped her move up the ranks quickly after graduating with a degree in Business Administration.