A personal loan is considered to be a low interest loan if it comes with an interest rate less than 12%. However it works the same as any other loan, it costs less as compared to other loan options. For availing low interest loans, you need a credit score of at least 720, along with a good credit history. Some low interest loan types are available for people with low credit score as well, but you may need to secure them with collateral. Interest rates keep on fluctuating and so do the market rate and the idea of investing for any type of emergency loan. So you need to determine the rate of interest and your ability to pay back before you go for availing the loans.
Where You Can Get Low Interest Loans
If you are looking for low interest loans, these are the best places to look for them:
- Banks: Some banks may agree to extend you a loan at significantly low interest rate, but for that, you need to have an excellent credit score. If you are an account holder at a bank, check if your bank can give special discount to you.
- Credit unions: Since credit unions have no shareholders, they can extend their profit to you in the form of a low interest rate on your loan. But check which credit union allows membership to common public.
Is it alright to borrow money from online money lenders?
- Online money lenders: There are several money lenders who operate completely online. Since they do not have any physical expenses, they are able to provide loans at a lower interest rate. You have better chances of getting low interest loans if your credit score is sufficient.
- It is very important to check the background history and the solvency of the moneylender’s company before you start going to avail personal or business loan from an online money lender.
- Your friends and family: If you have a rich friend or relative, you can ask financial help from them. Some of them may agree to provide you a low interest loan, and if you have a good relationship with them, may be even extend you a loan for free.
Tips to Get Low Interest Loans
Here are a few tips that can help in grabbing a loan with best interest rate:
- Keep a check on your credit score: As a matter of fact, the higher credit score you have, the lower interest rate you may get on your loans. To maintain a good credit score, you should maintain minimum balance in your bank account, pay your credit card bills in time, keep your utility bills clear, avoid any late payments and pay your loan installments without fail.
- Pay off your existing debts: One thing that money lenders look into your credit report is your ratio of debt-to-income. However, if you don’t have any loans in your name, you have maximum chances of getting low interest loans.
- Compare: Different lenders have different criteria to determine their interest rates on loans. But keep other things in mind too, such as their late payment charges, their loan term, the amount of monthly installments, their reputation etc. Reading the fine print carefully will give you a clear picture of their terms and conditions.
Getting low interest loans can save you a significant amount of money by the end of the loan term. It is not always feasible to get money from your own bank, even if you have collateral, and you are sure of the repayment. Each government has its own regulatory body for lending loans, so you can compare the loan disbursement features of three or more banks before you settle finally for one.