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Low interest personal loans
Low interest personal loans are used to mostly offset the burden of debt. This is usually necessary if the individual needs to access funds to make purchase or pay down debt on his or her own. Personal loans can help consumers with a variety of needs in different credit situations. Paying down debt with a personal loan is a great solution for many Americans. They can help those stuck carrying large balances on credit cards making small or minimum payments-especially if the interest rates on your credit cards are higher than you would have with a personal loan. Consumers with good and excellent credit (720 and above) frequently see rates between 6% and 10% which is significantly lower than credit card rates and competitive with other methods of financing. Personal loans can make it easier to finance home improvements, purchase a car, or cover unexpected expenses.
How to find the lowest rates on personal loans
Obtaining the lowest rates on personal loans requires some practice, you have to consider some options and make a mental assessment of some things you really need so that you get the best of service from these loans you are obtaining. Some of these options are what you should consider before applying for that low interest personal loans.
- See if you qualify for a 0% credit card. If you have good credit, you can probably get a credit card that has 0% interest on purchases for a year or longer, and that may be less expensive than taking out a personal loan.
- Consider a secured loan instead. If you have a house, consider using it as collateral in order to get lower rates. A home equity loan or home equity line of credit can often be cheaper than an unsecured personal loan. Keep in mind that using your home as collateral means that if you default, you could lose your home.
- Pay off as much of your credit card balance as you can before you apply. The outstanding balance on your credit card — even if you pay it off at the end of the month and never pay interest — counts against you when a lender runs a credit check.
- Shop around. Your local bank or credit union may have great rates, especially if you have a long relationship. But online lenders are offering very competitive rates, especially for borrowers without top-notch credit.
What to watch out for with low interest personal loans
If you ignore the fine print in your personal loan agreement, you could find out the hard way that you agreed to less-than-desirable terms. Look for these traps before signing your contract:
- Prepayment penalties. Most online lenders do not charge a fee for paying off the loan before a certain date, called prepayment penalties or exit fees. But just to be sure, always look for the words “no prepayment penalty” on your loan terms when you apply.
- Accidental overdrafts. Many online lenders ask for automatic withdrawals from your checking account, or offer a lower APR for choosing this option instead of paying by check. If you link your loan to your checking account for automatic payments, you might be in danger of overdrawing your account and paying an overdraft fee — usually, about $35. To avoid accidentally draining your bank account, consider setting up a low balance alert with your bank.
- Scam artists. Before you sign up for any loan, particularly online, check out the Better Business Bureau and Federal Trade Commission to make sure the organization is legitimate. If you borrow from a lender who has a record of unfair practices or charges usurious rates, you may have a hard time getting out of debt.
Taking out a personal loan can help you relieve your debt load and cover unexpected costs, but take stock of your options before settling on one choice. Find the lowest rates, borrow only what you need and repay your debts on time. In subsequent articles, we’ll furnish you with a list of firms where you can get the best low interest loans in the us, their various strengths and weaknesses. Visit LawsandLoans.com daily, we keep you updated!