Easy Ways To Apply For A Low-Interest Loan
There are many advantages of taking out a loan rather than applying for a credit card. Typically, more money is available to borrow, and this is a very important consideration if you are seeking to undertake home renovations or deal with a costly medical bill. Moreover, it becomes easier to schedule your repayments.
Where a loan really stands out from its alternatives, however, is when you can secure a low interest rate, affording you some peace of mind and saving over the long-term. In the steps below, we explore how this can be achieved.
Fees and interest rates can vary, and sometimes quite dramatically so. It, therefore, pays to take your time and shop around.
Before you compare offers from the multitude of online lenders and banks vying for your business, ask yourself some key questions. How much do you need? How long ideally will it take to pay off the loan? Does a secured loan work better for you than an unsecured one?
With your criteria in place, you may begin your search. You should specifically be looking for the best APR rates, as they factor in fees in addition to the interest. Fixed APRs usually range between 6% and 36%. The loan with the lowest rate is the least expensive and often the shrewdest choice from a lender’s perspective.
Check Your Credit Score
It naturally follows that the most generous interest rates are offered to those with the best credit scores. It makes sense then to go into the application process armed with the knowledge of your credit score.
While looking up your credit report, check thoroughly for errors. This includes closed accounts listed as open and incorrect limits, as these issues are relatively common.
If urgency isn’t an issue, it is also advisable to strengthen your credit score ahead of applying for a loan. This can be done by paying more than the minimum on your existing payments and increasing any credit card limits to reduce overall credit utilization.
Look At Unsecured Loans
An unsecured loan is always a far more desirable option than a secured one given the latter will demand collateral to secure the loan, usually in the form of an asset like your car or home. If a loan can not be repaid, your asset can then be seized and sold to ensure the lender recovers its money back.
With security in mind, it is unsurprising that lenders are willing to offer great rates in return, and if this is a route you are happy to take, it can be a feasible choice.
By wading through the offers available however it is usually the case that an unsecured loan with low interest exists. Effectively the best of both worlds it should always be worthy of serious consideration.
Go For A Short Term Loan
The life-span of your loan is called your loan term. Determining the length goes a long way to deciding what rates will be offered.
Generally, the lowest APR loans are attached to longer terms. That does not mean it will be cheaper of course, as you will be paying interest for a longer period. Shorter-term loans may have a slightly higher APR, but this is offset by its quicker retirement.
If the monthly payments on a short term loan are affordable, this is almost always the better option. If one can be sourced alongside a low APR, assuming all the other details are favorable, give it serious attention.
Get A Cosigner
By getting a cosigner on board, you are adding a second guarantor to the loan application. Should that person boast a healthy credit history, this reassures the lender that the loan will be repaid. Thus a lower rate and great terms are generally offered.
The cosigner can be a parent or friend. By stepping up, they are agreeing to take financial responsibility should you default, acting as a repayment safety net.
Without the existence of cosigners, many borrowers would struggle to get approved and not only those with poor credit. First-time borrowers yet to build up a meaningful credit score benefit hugely from submitting an improved debt-to-income ratio.
Having a cosigner can be a win-win situation for all parties concerned.
Whatever your financial circumstances, there is a low interest loan out there for you, with some taking mere minutes to arrange online should you have your details in hand.
Still, it is advisable not to jump in with both feet, but instead consider what most suits your needs and what works best for you. Putting in the homework beforehand puts you in control of your financial future.