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Sep 23, 2019 02:09 PM EDT

7 Ways to Get the Best Personal Loan Rates

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If your goal is to secure a personal loan, then there is nothing more important to you than getting a low rate. After all, nobody likes to take loans that come with hefty fees and rates. While many lenders may have you believe that their package is the best for you, it is always important to shop around for the best personal loan lender that has the best loan rate. The reason is that a couple of percentage points difference in rates can amount to several thousands of dollars over the loan term. In this light, we will now show you some tips to help you get the best rates on all your personal loans.

Work on your credit score

The higher your credit score, the lesser the risk a lender will be taking on you. So if you want to get the best rates on your personal loans, you'd better start working towards improving your credit score. Not only can an average or bad credit score prevent you from getting loans, but at the very least, it can translate into higher rates. Lenders will most likely choose to up their rates when they finally decide to give a loan to someone with bad credit. But all hope isn't lost if you have bad credit because you can always improve it when you see fit. To improve your credit score, you can:

  • Get added as an authorized user
  • Pay down credit card debt
  • Clear off existing debt
  • Pay more than minimum payments
  • Halt any auto loan, line of credit, or mortgage application until you've worked on your credit score.

Go for a shorter personal loan

The more quickly a loan is repaid, the less risk there is for the lender. So in order to compensate for a short-term loan, lenders often drop their rates. If you know you have the financial capability to repay the loan within a short period (usually between one month and three years), then you can apply for a short term loan. The advantage is that these types of loans come with a very low-interest rate.  

Check the small print

First and foremost, before you proceed with any loan application, be sure to check the terms and conditions associated with it. Make sure you check the charges, fees, and interest you will pay over the course of the loan duration. More often than not, a loan might have a low-interest rate, but when you incorporate some additional fees and charges, you may be looking at a hefty sum, whereas another loan that appears to have a higher interest rate may not be so high in the long run. So, to find the best rates for your loans, do well to check all the small prints. 

Go for a secured loan

With an unsecured loan, you wouldn't need to deposit any amount of money to get the loan, but a secured loan, on the other hand, may require that you leave something as deposit in case you cannot pay back the loan. A secured loan is guaranteed by an asset owned by the borrower, which could be a car, home, cash, or even investment. Unlike unsecured loans, secured loans tend to carry with them lower interest rates because the lender believes that the risk has been mitigated.

Special offers and discounts

Another idea would be for you to seek out cash advances from a competitive source. Contrary to what many might have you believe, cash advances - like the ones you will find on OpenCashAdvance - can be a viable solution when you are looking for a short-term loan. With a cash advance, you may get funded faster than with other options, although the interest rate will likely be higher. The terms and conditions associated with these advances vary from lender to lender, though, and some lenders may be more competitive than others.

Get a cosigner

Even if your credit score isn't so convincing, you may still find yourself a loan. But chances are the rates will be astronomical, or at the very least, unfair. So in order to get yourself out of such a situation, you can ride on the score of a friend, colleague, or family member whose credit score is much better than yours. Provided you find someone willing enough to cosign with you, and whose credit score looks enticing, then, your lender may be happy to give you a loan at a much better rate.

Variable interest rates could be the best option

I know many of us are so used to fixed rates that we forget there is another loan option out there: the variable interest rate. While fixed-rate makes it simpler to understand and structure your repayments, a variable interest rate could actually mean lower payments for you at the beginning of the loan repayment followed by higher rates later in the course of the loan repayment. 

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