Taking out a personal loan is often necessary to help cover a big purchase or consolidate high-interest debt. With so many online lenders to choose from, finding the best personal loan and rate for your needs can be challenging. Follow the tips in this article to compare lenders, assess loan features, and make sure you get a personal loan that will save you money.
Personal Loan Rates To Look For
The first thing to compare between lenders is the annual percentage rate (APR). This factors in both the interest rate and any fees associated with the loan. For good credit borrowers, the best online personal loan rates currently range from about 5% to 36%. Getting pre-qualified lets borrowers see their personalized rate options across multiple lenders through soft credit checks.
APR isn’t the only deciding factor. Online lenders offer different types of rates:
– Fixed rates stay the same over the loan repayment term
– Variable rates may fluctuate over time depending on market factors
Fixed rates provide consistent monthly payments for budgeting ease. But variable rates could start lower and save borrowers money if they trend downward over a longer-term loan.
Key Loan Features To Evaluate
In addition to finding the lowest APR, you also want to make sure the loan terms and features match your situation.
Loan amount: Calculate the amount you need to cover the intended purpose without overborrowing. Most online lenders offer personal loans from $1,000 up to $100,000.
Loan term length: Longer terms of 5 to 7 years have lower monthly payments but higher total interest costs. Shorter terms have higher monthly payments with less interest. Evaluate your budget to strike the right balance.
Payback options: Many lenders let you pick a payback schedule – for example, making weekly, bi-weekly, or monthly payments. The more frequent payment schedule saves money over time by cutting down the total interest.
Prepayment policies: Having the option to pay off your loan early with no penalty can save you money on interest charges. But not all personal loan companies offer prepayment.
Funding speed: If you need money fast for an emergency expense or rare opportunity, you’ll want to look at lenders that fund loans within 1-3 business days after approval.
Ask The Right Questions
Beyond costs and features, you also need to gauge customer service and company trustworthiness since you are entering a multi-year financial relationship. Here are key questions to have answered:
– How long has the company been in business?
– What is their track record with personal loan clients?
– Do they provide U.S.-based customer service?
– Is there a mobile app and automatic payments option?
– What are their late fees and grace period policies?
Getting your questions answered directly gives you confidence you’re working with a reputable lender that can fully meet your needs over the full payback period. Don’t hesitate to talk to representatives before committing.
Frequently Asked Questions About Personal Loans
Q1: How does getting a personal loan affect my credit score?
A personal loan can help build credit history when made on time each month. Too many loan applications in a short time can lower scores briefly. A personalized rate check shows your chances without hurting your score.
Q2: Why are online lender rates lower than banks?
Online lenders have lower overhead costs than traditional banks, so they can pass savings to customers through lower interest rates. Automated online platforms help keep costs down.
Q3: Can I get approved for a personal loan with bad credit?
Lenders specializing in bad credit loans approve borrowers with scores in the 580-599 range or below. But they charge higher interest to offset risk. Improving your credit first may help you qualify for better rates.
Q4: What are the basic requirements to qualify for a personal loan?
You must be a U.S. citizen or permanent resident aged 18+ with regular income and a personal checking account. Most lenders also check for a minimum credit score around 600 and steady monthly income.
The Bottom Line
Doing thorough research before choosing an online lender can help borrowers save money through lower rates and fees. Comparing personalized options from multiple lenders locks in the perfect loan to meet your financial needs and budget.