Personal loans are the fastest growing lending category in the US. Over 60% of borrowers have taken a personal loan to refinance credit cards or consolidate their debts. In 2018, Americans owed $125.4 billion in personal loans compared to $55.7 billion in 2012.
Despite this, personal loans are the cheapest way to borrow money. The rates are lower than those of unsecured debt like credit cards. Want to know how to get good personal loan rates.
Read on and learn 5 useful tips for getting the best personal loan rates.
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1. Do a Little Comparison Shopping
Different lenders offer different types of personal loans, fees, and rates. To ensure that you get the best deal, do a little comparison shopping. Start with your local banks.
If the requirements are too high, check online personal loan providers. After a little research on rates offered by online providers, check the credit unions. To know that you are getting the best rates and fees, check their terms.
2. Maintain a Positive Credit History
Looking for help with personal loans? To get the best personal loan rates 2019 and terms, maintain a positive credit history. By doing so, you are able to build and maintain a high credit score.
If your credit score is not great, there are a few steps you can take to improve it.
- Start by paying off all your credit card balances
- Make a point of paying your bills
- Keep repaying other loans such as student loans
- Keep your credit card balances low
Practicing the healthy credit habits above will give your credit score a boost. This translates to lower personal loan rates.
3. Get Rate Offers from Different Lenders
Each lender has its own formula when it comes to setting fees and rates. To ensure that you are able to walk away with the best rates, get offers from different lenders. When doing so, start with lenders providing soft credit checks.
Soft credit checks will not ding your credit. What you need to know is that lenders generate accurate rates using your details. This allows you to compare different loan products and choose what suits your needs.
4. Go for the Shorter Personal Loan Term
Majority of lenders reserve their best rates for personal loans repaid within 3 to 5 years. Why is that? Well, short term personal loans mean the lender gets his money back fast.
As such, there is less risk of defaulting. If you want to build your credit score and continue getting the best rates, start with short term loans. By choosing the shortest, you keep your monthly payments manageable.
5. Opt for a Secured Personal Loan
In most cases, lenders offer unsecured personal loans. As such, lenders do not need collateral but they depend on your credit history and credit score. Want to get the best personal loan rates 2019?
Consider a secured personal loan. In this case, the lender will require you to guarantee with collateral. For instance, home equity, savings, your investments or auto equity. By doing so, you increase your chances of getting approved for lower rates.
Getting the Best Personal Loan Rates in 2019
There are more steps you can take to secure the best personal loan rates. Sign up for personal loan discounts, add a cosigner, check the APRs and watch out for origination fees. Now that you know how to get the best personal loan rates, remember to check your credit report for errors.
Learn more about personal loans and how to complete your request to get one.
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