Finding a good lender for a personal loan is a somewhat subjective process. The subjective part is rooted in defining the “good” part of a good lender. For some, a lender simply willing to approve a loan may be deemed “good”. Being approved for a loan can be elusive for some. Others won’t have any trouble be approved by everyone. And then there are those who find themselves fielding decent loan offers, but the interest rates have questions marks around them. Interest can be a little confusing to those who feel the rates aren’t great, but they are not outrageously high.
The applicant with a good credit score finds him/herself in a quandary. Loan offers are not necessarily sparse, but the interest rates are a bit sketchy. Others might not even have an opinion on the interest rates. They don’t know if the figure is good or bad. A little bit of research could yield a decent perspective into what are reasonable interest rates for personal loans.
The Outstanding Credit Rate
A person with outstanding credit may be looking at a very reasonable rate for a personal loan. 10% is the average figure he/she might be staring at. That 10% figure could even drop lower based on other factors.
Income and employment both play roles in the determination of an interest rate. A person with a reliable stream of discretionary income is simply a good prospect to pay the loan back. Hence, he/she would be offered a lower interest rate than someone with a weak credit score and lower income potential.
Geography plays a role in interest rates as well. They may be much lower in one part of the country than another. This might not seem fair, but there are various location-related considerations applied to the interest determination formula.
Debt level also plays a role in the interest rate presented. Anyone with a high amount of debt is going to find locating low interest rates a bit difficult. This is true even when income levels are high. Excess debt drags down credit scores and creates doubt in the mind of lenders.
The Good Credit Solution
Good credit is enviable. A lot of people with they had it. Good, however, is never great. As such, a person with good credit won’t find the same fantastic interest rates as those who possess great credit. A person with good credit can still find competitive offers, but he/she has to perform a little extra work to find the best available personal loan rates.
Shopping around and checking out the various lenders is advised. Look closely at what the lowest available interest rate they offer is. The actual rate quoted is going to be higher for someone with good — as opposed to great — credit. The difference won’t be too outrageous though. A lowest rate of 10% may translate into 12% to 18% for someone with good credit. Excessively high rates of more than 20% would be reserved for those with very poor credit.
And then there is another strategy worth exploring for those looking to save some money on a mediocre interest rate.
The Introductory Credit Card Offer
Intrepid borrowers willing to do a little bit of searching may find a credit card offer with a solid 0% introductory offer. The way these cards work is simple. Debt can be transferred to these one of these cards and, for the first 12 to 18 months, no interest is charged. The cards usually come with “credit card checks” that may be written on the account. Any borrower with, say, a $4,000 on a loan with 13% interest could pay the balance off with the credit card check. Other than a nominal balance transfer fee and/or an annual fee, the card comes quite cheap. Again, no interest is charged during the introductory offer.
Taking out a three year loan at 13%, paying the loan for 18 months, and transferring the remaining balance to a zero-interest card for 18 months averages out to a three-year 6.5% loan.
Beware of the costs associated with the end of the introductory offer. The interest rates could skyrocket. For this reason, paying the balance off before the introductory period ends would be prudent. Then again, there is no rule that stipulates the balance cannot be transferred to another low-introductory rate credit card.
Personal loans, ultimately, do not have to be costly as long as the borrower is not complacent when seeking one.
What About a Secured Loan?
Those who are not thrilled at the interest rates quoted for personal loans do have the option of looking at a secured loan option as opposed to an unsecured one. While a secured loan requires collateral, the interest rates are gong to be lower. The exception to this would be gimmick loans that target those with very po