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A personal loan can help you pay for planned or unplanned expenses, but it’s not a blank check. You’ll need to repay not only the principal loan balance but also interest charges.

Shopping for a competitive rate, even on a low-interest personal loan, can reduce the interest you pay on your loan. That can save you hundreds, if not thousands, of dollars on your cost of borrowing.

You may be wondering where to shop for low-interest personal loans and what to ask before you agree to a new loan. Here’s what you need to know.

What Is the Best Interest Rate on a Personal Loan?

When you shop around for the best personal loan interest rate, you can save. Compare your personal loan offers with national average trends for personal loans to know if you’ve found a good deal.

The average personal loan rate is 10.84%. Last week’s average rate was 10.81%.

*Rate as of June 8, 2020.

What Are the Best Low-Interest Personal Loans?

  • Marcus by Goldman Sachs: Best lender for customer service.

  • Best Egg: Best lender with no minimum credit requirement.

  • FreedomPlus: Best lender with a co-signer option.

  • Payoff: Best lender for credit card debt consolidation

  • Upgrade: Best lender for a completely online loan process.

  • Discover: Best lender charging only late fees.

  • Earnest: Best lender for borrowers with a debt-to-income ratio of up to 60%.

  • Peerform: Best lender for borrowing online.

  • Rocket Loans: Best lender for loans as little as $2,000.

  • Upstart: Best lender for borrowers with FICO scores as low as 620.

Best lender for customer service.

Borrowers can apply for fixed-rate unsecured personal loans with Marcus by Goldman Sachs. Personal loans with this lender have no origination, prepayment or late fees.

  • Minimum FICO score: Not disclosed
  • Maximum debt-to-income ratio: Not disclosed
  • Co-signer option: No
  • Preapproval or rate quotes available: Not disclosed
  • Loan amounts: $3,500 to $40,000
  • Loan terms: 36 months to 72 months
  • Loan use restrictions: Only debt consolidation, home improvement, major purchases, special occasions, moving and relocation and vacations
  • Discounts: N/A
  • Origination fee: None

Best Features

  • Marcus does not charge any fees on its personal loans.

  • Borrowers can adjust their payment due date.

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Best lender with no minimum credit requirement.

Best Egg is a national online lender offering personal loans starting at $2,000 for a variety of purposes. Loans can be funded in as little as one business day.

  • Minimum FICO score: N/A
  • Max DTI: N/A
  • Co-signer option: No
  • Preapproval or rate quotes available: Yes
  • Loan amounts: $2,000 to $35,000
  • Loan terms: 0 months to 60 months
  • Loan use restrictions: N/A
  • Discounts: N/A
  • Origination fee: 0.99% – 5.99%

Best Features

  • Loan funding typically takes one to three business days.

  • The minimum loan amount is $2,000.

See full profile

Best lender with a co-signer option.

FreedomPlus offers personal loans with fast approval and fund delivery. Personal loans with FreedomPlus are primarily offered for debt consolidation. If you need help qualifying for your loan, you can use a co-signer with this lender.

  • Minimum FICO credit score: 620
  • Maximum debt-to-income ratio: Maximum is 45% in some cases but 40% in most cases or 30%. Average is 22%.
  • Co-signer option: Yes
  • Preapproval or rate quotes: Yes
  • Loan amounts: $7,500 to $40,000
  • Loan terms: 2 to 5 years
  • Discounts: Co-borrower discount for adding another applicant to your loan request, direct pay discount for letting FreedomPlus use the loan to pay your creditors directly, retirement asset discount if you have over $40,000 in retirement funds like a 401(k) or IRA
  • Origination fee: 0% to 5%

Best Features

  • Borrowers with fair credit may qualify for a loan.

  • Loans of up to $40,000 are available.

  • Same-day approval is available, with loans funded in as little as 48 hours.

See full profile

Best lender for credit card debt consolidation

Payoff offers personal loans designed to consolidate credit card and other high-interest debt. The lender operates nationwide and provides loans of up to $35,000.

  • Minimum FICO score: 640
  • Maximum debt-to-income ratio: 50%
  • Co-signer option: No
  • Preapproval or rate quotes available: Yes
  • Loan amounts: $5,000 to $35,000
  • Loan terms: 2 to 5 years
  • Loan use restrictions: N/A
  • Discounts: N/A
  • Origination fee: Between 0-5%

Best Features

  • Borrowers do not face prepayment or late fees.

  • Borrowers can get preapproved with no hard credit check.

See full profile

Best lender for a completely online loan process.

Upgrade has offered loans since 2016. Borrowers can choose from a wide range of loan amounts from $1,000 to $50,000 and loan terms of three to five years.

  • Minimum FICO credit score: N/A
  • Maximum debt-to-income ratio: N/A
  • Co-signer option: N/A
  • Preapproval or rate quotes: Yes
  • Loan amounts: $1,000 to $50,000
  • Loan terms: 36 months to 60 months
  • Discounts: N/A
  • Origination fee: 1.5% to 6%

Best Features

  • Loans and lines of credit are available up to $50,000.

  • Borrowers can complete the entire loan process online.

See full profile

Best lender charging only late fees.

Discover offers personal loans for debt consolidation, home improvement and major purchases. Loan terms from three to seven years are available.

  • Minimum FICO score: 660
  • Maximum debt-to-income ratio: N/A
  • Co-signer option: No
  • Preapproval or rate quotes available: Rate check available
  • Loan amounts: $2,500 to $35,000
  • Loan terms: 36 months to 84 months
  • Loan use restrictions: Only debt consolidation, home repairs/improvements, unexpected expenses or major purchases.
  • Discounts: N/A
  • Origination fee: None

Best Features

  • Discover has no fees other than a late fee.

  • Customizable loan terms from 36 to 84 months.

  • Borrowers get free access to their FICO credit score.

See full profile

Best lender for borrowers with a debt-to-income ratio of up to 60%.

Founded in 2014, Earnest is another fast-growing lender in Silicon Valley. It uses a custom algorithm that identities good loan prospects by considering more than just their credit score.

Earnest clients can decide how much they want to pay each month and then Earnest gives them an interest rate to match. By letting customers decide what they’re comfortable paying, this could also cut down on defaults and late payments.

Best Features

  • Loans available up to $75,000.

See full profile

Best lender for borrowing online.

Peerform is a marketplace lending platform that connects borrowers nationwide with investors. Borrowers with a credit score of 600 or higher may qualify for loans of up to $25,000.

  • Minimum FICO score: 600
  • Maximum debt-to-income ratio: N/A
  • Co-signer option: No
  • Preapproval or rate quotes available: Yes
  • Loan amounts: $4,000 to $25,000
  • Loan terms: 3 years
  • Loan use restrictions: N/A
  • Discounts: N/A
  • Origination fee: Between 0-5%

Best Features

  • Some borrowers with fair credit may qualify.

  • Borrowers can complete the entire loan process online.

See full profile

Best lender for loans as little as $2,000.

RocketLoans offers personal loans to qualified borrowers in all 50 states. These loans are designed for people with fair to excellent credit who need to borrow up to $45,000 for debt consolidation, home improvements, medical expenses and business or other expenses.

  • Minimum FICO score: 640
  • Max DTI: 32%
  • Co-signer option: N/A
  • Preapproval or rate quotes available: Yes
  • Loan amounts: $2,000 to $45,000
  • Loan terms: 36 months to 60 months
  • Loan use restrictions: Eligibility for a loan is not guaranteed. Please refer to our Disclosures and Licenses page for state-required disclosures, licenses, and lending restrictions.
  • Discounts: Discounts to Quicken Loans mortgage holders.
  • Origination fee: Yes

Best Features

  • Same-day loan funding is available for up to $25,000.

  • No prepayment penalties apply.

See full profile

Best lender for borrowers with FICO scores as low as 620.

Upstart uses automation to originate credit, funding more than $3.2 billion to 250,000 borrowers. Loans as small as $1,000 are available with this lender.

  • Minimum FICO score: 620
  • Maximum debt-to-income ratio: Not disclosed
  • Co-signer option: No
  • Preapproval or rate quotes available: Yes
  • Loan amounts: $1,000 to $50,000
  • Loan terms: 3 to 5 years
  • Loan use restrictions: Loan funds may not be used for any prohibited uses noted in Upstart’s Acceptable Use Policy.
  • Discounts: N/A
  • Origination fee: 0% to 8%

Best Features

  • Upstart may accept applicants with fair credit or even those with no credit history, using artificial intelligence to quantify risk.

See full profile

Personal Loan Finder

Select your desired loan amount and loan purpose, your credit score range, and your state to see estimated annual percentage rates and loan terms.

Why Is a Low-Interest Personal Loan Important?

The lower your interest rate, the larger the portion of your payment that goes toward paying down principal rather than interest over the life of the loan. Here are a couple of scenarios that show the effects of interest rates on the cost of a personal loan:

Let’s say you received an offer for a $5,000 personal loan with a 9.3% annual percentage rate and a four-year repayment term. With this loan, you’d pay $1,006.66 in interest alone.

Now assume that you were approved for a $5,000 personal loan with a four-year term and a 6.75% APR. By comparison, your total interest charges on this loan would be $719.30, resulting in interest savings of $287.36.

Your interest rate makes more of a difference if you’re taking out a larger or longer-term loan. The average personal loan balance is $16,259, according to a 2019 personal loan study from the credit bureau Experian.

With this figure in mind, and the same 9.3% APR but a six-year term, interest charges increase to a sizable $5,017.28. If you can shop around for a loan and get the same term at 6.2% APR, you would spend $3,252.73 and save close to $1,800.

What Is a Good Interest Rate on a Personal Loan?

The good news is that you can find low-interest loans and that the average rate for all personal loans is about 12%. That’s particularly helpful if you need to pay off high-interest debt.

You’ll pay down debt faster than on credit cards with APRs of 20% or higher, says David Bakke, personal finance expert at Dollar Sanity, a financial education website.

Getting a good personal loan rate, though, depends on your credit profile. This often includes your credit history and score, income, and debt.

All lenders have their own criteria to set applicants’ interest rates and terms.

Which Factors Affect Your Personal Loan Rate?

Here are a few key areas that lenders look at to determine personal loan approvals and interest rates:

Creditworthiness
Your credit score is one of the major factors lenders consider for personal loan eligibility, says Lauren Anastasio, certified financial planner at SoFi, a personal finance company. “Lenders don’t always disclose whether they have a minimum credit score for applicants, but often they prefer to see a good or excellent credit history,” she says.

A FICO credit score in the mid-700s or higher is considered very good to exceptional and generally earns you a competitive interest rate.

Co-Signers
A co-signer, ideally one with strong credit, is held liable for repaying your loan if you can’t. Lenders may approve a loan at a lower rate when you have a co-signer.

“If you don’t have a stellar credit score or don’t make very much, adding a co-borrower to your loan might increase your chances of approval,” Anastasio says. “They might also help you get a better interest rate and repayment terms.”

Debt-to-Income Ratio
Lenders will evaluate your income to ensure that you earn enough to repay the loan. A part of this assessment involves your debt-to-income ratio.

Your debt-to-income ratio, or DTI, is the percentage of your monthly income you put toward debt. It helps lenders gauge whether you can manage a personal loan payment without financial hardship.

“And, in a nutshell, the maximum debt-to-income ratio you want if you’re looking for a personal loan is right around 35%,” Bakke says. “Anything higher than that and the lender will be thinking twice about whether or not to extend the loan.”

Type of Personal Loan
Whether your personal loan is secured or unsecured can influence your interest rate. With a secured loan, you’re providing collateral that the lender can claim if you default on your loan.

“Secured loans, backed by assets owned by the borrower, like a car or house, are less risky to the lender and therefore often come with much lower interest rates, reducing the cost of borrowing over the life of the loan,” Anastasio says.

Before jumping on a secured personal loan, factor in the risk of losing your collateral, such as your home, if you can’t make the payments.

Discounts
Some lenders offer a small APR percentage point reduction for existing customers or for signing up for automatic payments.

How Can I Get a Low Interest Rate on Personal Loans?

Take these steps to find the lowest rates on personal loans.

1. Check Your Rate
Lenders may advertise a range of APRs, but you won’t find out your rate until a lender checks your credit. Prequalification can tell you whether you could be approved for a low-interest personal loan using only a soft credit inquiry, which doesn’t affect your credit score.

“Many lenders allow potential borrowers to see if they prequalify for a loan before applying,” Anastasio says. “This process shows how much the loan would potentially be approved for, what your repayment terms and your interest rate could possibly be.”

Not all lenders offer prequalification options, but online lenders generally do. You’ll submit basic information, such as how much you want to borrow and your income, and the lender will perform a soft credit check.

This option gives you great insight into whether you might meet borrower criteria and what terms you could get without committing to the loan or hurting your credit.

Plus, the process can be quick. Some lenders let you check whether you prequalify online, which can take just minutes.

2. Check With Your Bank or Credit Union
When you’re rate shopping, getting a quote from a financial institution you have a relationship with could pay off. “Your bank or credit union would be a great place to start,” Bakke says. “However, rates and fees do vary, so it’s recommended that you get quotes from at least three lenders.”

Your bank or credit union might be able to offer a more competitive rate than rivals because it has a window into your finances that the others don’t. If you have deposit accounts, for example, the bank may consider your wages, spending patterns and savings.

3. Be a More Attractive Borrower and Try Again
If you can’t get approved for a competitive rate on a personal loan, you might want to wait. Take time to focus on raising your credit score and reapply.

Advertising Disclosure: Some of the loan offers on this site are from companies
who are advertising clients of U.S. News. Advertising considerations may impact
where offers appear on the site but do not affect any editorial decisions,
such as which loan products we write about and how we evaluate them. This site
does not include all loan companies or all loan offers available in the marketplace.

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