A personal loan may be the best option if you are looking for quick cash or debt consolidation.
Personal loans offer lump sum payouts and you can use the funds for whatever you want. They’re also unsecured, meaning you don’t need any collateral to qualify.
If you’re thinking about getting a personal loan, get started today. You may be eligible for a quick cash lump sum.
If you’re considering a personal loan, here’s what you need to know about interest rates — and how to get the best one.
How to get the best rates on personal loans
Your personal rate will depend heavily on the following:
- Your credit rating: The best way to get a low personal rate is to improve your credit score. The best rates are reserved for those with a credit score of 800 or higher. If your score isn’t quite at that level, you can improve it by paying off your debts, disputing errors on your credit report, and paying your bills on time. (Here how to check your credit score)
- Your financial history: Financial institutions can look at your debt repayment history.
- Relationships with banks or credit unions: In some cases, an existing relationship with the bank or credit union that lends you money may give you a lower rate. You can also get rate discounts for setting up an autopay account.
- Loan term: Offers may vary depending on the loan term you choose.
generally speaking the better your credit score and the stronger your payment history, the lower the rate you’ll get. If you have a poor credit rating or are late on your payments, you can usually expect a higher interest rate. In this way, the lender compensates you for the additional risk.
To compete for the lowest interest rates, you first need to rebuild your credit. This is a process that won’t produce results overnight, so it’s best to start sooner.
What is considered a good personal loan rate?
Interest rates on personal loans fluctuate, but according to the Federal Reserve Bank of St. Louis, the average rate on a two-year private loan is currently 8.73%. So, if you can get that rate or lower, then you’re on the right track.
In general, personal loans have higher rates than other types of loans – especially secured loans. Mortgage loansfor example, it currently hovers around 6%.
However, personal loan rates are generally lower than credit card rates. That’s why they’re often smart debt consolidation options for consumers with a lot of credit card debt. For example, the average rate on a commercial credit card in May 2022 was more than 15%, which is much higher than the average rate on a private loan.
If you want to know what personal loan rate you qualify for, Lenders are ready to help you.
How to apply for a personal loan
To get a personal loan, you first need to find a lender. To make sure you’re getting the best deal, apply for pre-qualification at at least a few different places, including your local bank or credit union, an online lender, and more. This will give you a full range of loan alternatives, as well as different fees, terms and rates to consider.
When you apply, you’ll need to provide your social security number, date of birth, contact and employment information, monthly mortgage or rental information, and your gross monthly income. You also need to know the amount of the loan and the term you want. If you’re not sure, a personal loan calculator can help you determine what’s right for your budget and ideal monthly payment.
You may also be asked to provide the following documents:
- Copies of your most recent W-2s and tax returns
- Recent utility bill showing current address
- Your latest earnings
- A copy of your driver’s license or social security card
There may be other points, but it depends on your lender and your unique financial situation. When you apply for a loan, you will be assigned a loan officer to guide you through the process. They will let you know if additional documents are needed.
Ready to get started? See what personal loans you qualify for now.
Other options to explore
If personal loans don’t work for you – or if you find the interest rates unaffordable – there are some other reliable ways to access large amounts of cash.
If you own a home, think about it cash refinancing. This is when you take out a new mortgage loan for more than what you currently owe. You then pay off the original loan amount and put the difference in cash. This extra money can be used for many of the same things you would use a personal loan for.
And if you’re an elderly homeowner, you can benefit from a reverse mortgage. A reverse mortgage allows homeowners (age 62 and older) who have paid off their mortgage in full (or paid off a significant amount) to get some of the equity in their home. This will qualify as tax-free income. However, it must be repaid if the homeowner dies or decides to sell the home. However, depending on how much money you owe and the current value of your home, this may be a way to access funds to use as you wish.
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