Lowest Personal Loan Rates - How To Find Best Deals

When it comes to the lowest personal loan rates banks are making it tougher for lenders, to not only borrow, but to borrow at competitive rates of interest. Lenders are tightening their lending criteria which means, you will find it more challenging to get the loan you want at an interest rate that is affordable.

The following guide will give you a few tips on helping you find cheap loan rates

Use Online Comparison Sites

In the current economy when lenders are becoming more cautious finding the lowest rate on a personal loan can be a long and tiresome process. For this reason, using comparison sites are a real time saver as they of do all the necessary searching for you.

Many of financial comparison sites provide the most up to date loan interest rates from the leading banks and lenders. Rather than going through individual sites you can compare several rates at once from one screen. As comparison sites become more popular they are introducing extra helpful search facilities.

For example, one leading comparison site has teamed up with a leading credit reporting agency. This partnership enables consumers like you to estimate your credit score and based on the result will display which loan offers you are most likely to be accepted for.

If you are looking for a  home equity loan many of the online comparison sites provide a mortgage and personal loan calculator which is a useful resource for working out how much the monthly installments and total costs will be on a 15 yr fixed or 30 yr fixed loan.

Approach Your Current Lender

If the comparison sites do not throw up any competitive rates of interest then another option is to approach your current bank. They might have a better rate for you which is a good possibility because they already know about your details such as your credit score. If its difficult finding the low rate you want from other banks because you have a low credit score your current lender may be more sympathetic. Contact them, explain your situation and see what financing they can offer you.

Consider Joining A Co-operative Credit Unions

Credit unions have been around for years and they offer alternative loan products,. terms and conditions and interest rates that are not available with the mainstream and commercial lenders. To avail of these offers you will have to become a member of the credit union. Each credit union generally has its own criteria when selecting members to join.

There are many benefits if you are successful in joining a credit union. First and foremost a co-operatives primary aim is to find the best deals and savings for its members. Compared to commercial lenders there are no hidden charges, annual fees are penalties if you cancel early.

In the past you could only join a credit union if you had a savings account with them however, this limitation has been removed with the vast majority of unions allowing new members join without a savings account.

Decide The Amount And How Long You Want To Borrow

Do not borrow if you are desperate or you up already up to your eyes in debt. If you are in this situation you really need to start paying off the debts you already have rather than adding to them. As a general rule you should only borrow the minimum amount you actually need and can afford to pay back.

Many lenders make loan repayments look less expensive by spreading the total debt amount over a longer repayment period. This lowers the monthly payments however, as your paying interest over a longer period the total cost of interest becomes more expensive the longer you pay. Adding another 10 years to your loan could also add several thousand.

Secured Personal Loans vs Unsecured Personal Loans

When choosing a personal loan there are two main types, secured and unsecured.

The vast majority of personal loans are unsecured however, you wouldn't think that as lenders promote heavily the secured option in the press and TV. They do this for a very good reason. Although secured loans sound safer they are really protecting the bank and not you, the borrower.

The main and crucial difference between the two is that with a secured loan you could lose your house or another asset if you can no longer repay. This is a win win situation for lenders and it is no wonder  they advertise them so heavily. When searching for the lowest rate personal loan it is best to avoid the unsecured option. Here are some reasons why:

As pointed out you could lose your home as your house can be used  as collateral to secure the loan. If you can't pay you could lose your house.

• It is harder to obtain a fixed rate deal on a secured personal loans because most of them come with variable rates meaning they can go or down.
• With variable rates many lenders like to attract you in with a low introductory rates and instant cash and then hike the interest rates once the honeymoon period is over. This means your monthly payments could go up by a third or more.
• Another policy of lenders is to promote cheaper monthly payments which sounds great however, they do not like to elaborate that in the long run you are actually paying more.

If you have bad credit score then finding the lowest unsecured loan rates will be out of reach and the only option you may have is the secured loan option. If this is so, you should be absolutely sure about what you could loose if you take the secured loan route.

Alternative Options to Finding Lowest Personal Loan Rates

Credit cards are worth a look at if you want to reduce the amount you are paying on existing debts. Its a matter of finding a card with a lower interest rate and transferring the balance onto the new lower rate credit card.

In many cases credit cards can have lower interest rates compared to personal loans and in some cases there  are credit card providers that still offer 0% on purchases. There are restrictions however, especially on the amount you can borrow. For big purchases the low credit limits on cards may not be practical as with loans you can borrow more.

To conclude. Finding banks with th lowest personal loan rates is not easy and it will take time to find the best deals. But the deals are out there. I hope these personal loan tips can help guide you to find the best deals you are looking for. However, if you are unfortunate to have a poor credit rating then, maybe it is better to postpone borrowing for now until you rebuild your credit.

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