Companies such as Lending Tree offer individual loans to people needing extra funds for such activities as settling debt or completing a personal project. Some of these companies provide low-interest loans that are beneficial in the long run because debtors end up paying less on interest. There are several other factors to consider when looking for a loan, but interest is typically the main factor.
Furthermore, applicants typically receive personal loan rates depending on factors like their credit score. People with a high credit score are more likely to access some of the best personal loan rates on the market. However, some loans also offer low rates, even if an applicant’s credit score is not significantly high.
Read more about low-interest loans and other factors when looking for a loan. Learn about origination fees and how to find loans with low-interest rates in the sections below.
Personal Loan Rates
Many lenders that debtors can find on sites like Lending Tree offer different types of rates depending on an applicant’s credit history. Even though many companies may offer low-interest loans, not all of them will make these types of offers to every lender. However, some loan companies tend to have a lower interest than others. These companies may also have less strict guidelines for their lending programs.
Personal loan rates will also consider some factors to give special offers to their applicants. For instance, students often have access to the best personal loan rates if they are enrolled in an accredited institution and have a good grade point average. Other loans may offer better rates to business owners or people that make up that particular organization. Applicants should look for the loan that will fit their needs best.
Factors That Influence Low-Interest Rates
Companies have different ways of setting low-interest personal rates that may be variable or fixed. Applicants with a better credit history often have access to the best personal loan rates because lending companies consider them less risky borrowers. Lending companies use a risk-based pricing method to determine the rates at which they will offer their loans to debtors. The riskier they consider an applicant, the higher the interest rate will be for the loan they offer that applicant.
However, many applicants find low-interest loans for bad credit scores because there are other factors that companies look at when determining the APR of a loan. Other factors that affect personal loan rates include:
- Credit history (different from credit score)
- Employment status
- Annual income
- Other outstanding debt
Therefore, it is possible for applicants to obtain low personal loan rates even if their credit score is not the best. Depending on other factors, it is also possible for applicants to access low-interest rates depending on the company that they apply for funds.
How to Find the Best Personal Loan Rates
No single lender offers low-interest rates to every applicant, and an applicant’s background may make him or her more suitable for some loans than others. According to research conducted by the National Credit Union Administration, some of the best personal loan rates for 36-month loans was around 10 percent. Of course, some loans may offer a higher or lower interest depending on the applicant and the term of the loan.
Moreover, applicants may also find low-interest loans online that often offer lower interest costs than banks or credit unions. These companies do not have as many operational costs, and they provide better personal loan rates because they do not have to pay as much in costs of physical locations. Companies like Lending Tree offer many online options for applicants to consider. More traditional debtors may consult with their local bank or credit union, which may be a preferred method for them.
Credit unions also offer low-interest loans to their members. These are non-profit organizations that can provide low-interest rates but have a different process from online companies and banks. Moreover, applicants tend to prefer being able to talk face to face about the terms of the loan with an expert or financial adviser at the credit union.
Furthermore, loan application sites also let applicants compare personal loan rates and different offers with soft credit checks. Applicants can check the best personal loan rates based on what companies are likely to offer when they apply.
However, this does not mean that an applicant will be approved for any loan that they apply for. Most companies look at many factors and request documents like proof of income or education certificates. These soft checks and offers are based merely on the applicant’s credit score or income, so it is not set in stone that the loan proposals will be the same when the applicant applies for funds.
Beyond Low-Interest Rates
Applicants that are comparing personal loan rates should invest plenty of time looking at different offers. However, loan interest rates should not be the only factor that they look at when shopping for a loan. While the APR is one of the essential factors, applicants must also consider other vital aspects to ensure that they pick the best loan for them.
Besides low-interest rates, applicants should consider the term of the loan. Repayment terms also influence personal loan rates because the longer a borrower takes to repay a loan, the more interest they will pay until they finish their payments. Moreover, applicants should also look at origination fees when they borrow the loan. This fee refers to a percentage that companies will take when they deposit the funds in an applicant’s account.
For this reason, applicants will not have access to the full amount they requested, but still must pay the entirety of the principal that they borrow. Besides low-interest rates, applicants should consider important factors besides the term of the loan and the origination fee. Other aspects besides the personal loan rate include ease of payment, customer services the company provides their customers and the amount of the monthly payment.