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Getting the Best Personal Loan Rates

Posted May 26th, 2010
by Staff

If you’re in the market for a personal loan, the temptation can be to just go with whatever your first offer is. You walk into your local bank or credit union, apply for the personal loan, and sign on the dotted line, crossing your fingers that you’re getting a decent rate.

This is a pretty irresponsible way to get a personal loan. If you want to be smart with your money and not pay more than you need to pay, you need to do a little bit of shopping around. Even a half percentage point difference on the interest rate can make a huge difference when it comes to the amount of interest you’re going to pay over time.

Here are some things you need to do if you want to get the best personal loan rates:

  • Make sure your credit is as good as it can be. Not everyone has perfect credit. That’s understandable. But you need to make sure that there aren’t errors on your credit report, too. Getting a copy of your credit report, which you can do for free from Annual Credit Report, is essential. It allows you to identify potential mistakes, as well as see if there are any old debts you may have forgotten about.
  • Choose the right personal loan for the task. If you’re buying a used car, you will probably be able to get a lower rate on your loan than if you’re using the money for debt consolidation. Talk to the lender about how you intend to use the money from your personal loan, and what type of personal loan will best suit your needs.
  • Shop around. Not all lenders are just going to offer you the best possible rate from the outset. In some cases, you’ll have some room to negotiate. If you compare lenders, you may also be able to use one lender’s offer as leverage for another lender. At the very least, shopping around lets you pick a loan with terms that best fit your situation.

Photo via ♥ellie♥

Categories: Advice, Credit Score



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