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Shopping for a loan can be quite a challenging task especially when you want to get low interest loans. It takes time searching for low interest loans because you have to be patient in comparing different lenders. By taking time to compare, you’ll find loan interest loans that will suit your financial need and personal circumstance.
How to Get Low Interest Loans?
Low interest loans are often the loans with the lowest annual percentage rate or the APR. The lower the APR or the interest rate, the cheaper the loan is. Whether you apply for a loan to cover for emergency expenses, for business reasons or personal purposes such as purchasing a new vehicle or appliance, spend for home extensions or vacation, you would definitely want to find low interest loans.
Those with good credit history often get the low interest loans. Therefore, it seems like having good credit and maintaining it is the best way to qualify for low interest loans. The key to this is by making repayments on the agreed schedule. If your credit rating is low, you may still be able to get a loan, but it’ll usually come with a much higher APR or interest rate.
To make the hunt easier for you, decide on the amount you need to borrow and the period you want to pay it back before you apply for a loan. This will make your search quick, as you compare and find low interest loans for you. Compare the rates of different lenders on the same amount you want to borrow, as well as other fees and loan features included in the loan agreement.
The APR depends greatly on your credit score as well as your personal circumstances. The higher your credit score, the better the higher you have of being granted low interest loans. In order to get low interest loans, you could also try taking some steps to improve your credit score first before you apply.
Having basic knowledge about loans is also a huge help in your search for low interest loans, so you might as well learn the jargons. When you are familiar with loans, you will be able to know how to find low interest loans wisely.
The Interest Rate and the APR
You might get confused with the two, but there is a slight difference. The interest rate is the amount you will pay for the borrowed money. It’s kind a like a profit for lenders for letting you borrow money from them. It does not include fees or any other charges that come with the loan. The APR reflects not only the interest rate but also any fees, any broker commission, and other charges that you pay to get the loan.
Be mindful when comparing the APRs of fixed-rate loans with that of variable-rate loans, or when comparing the APRs of different variable-rate loans. With a variable-rate loan, the cost of the loan may or may not change each month. It will either go up or go down.
The Principal and the Total Cost of the Loan
The principal refers to the loan amount that the lender allows you to borrow. The total cost of the loan is the total sum you need to repay, which includes the principal, the interest rate, and other fees and charges, if there are any.
The Loan Term or the Repayment Period
This refers to how long you will repay the loan, which is usually expressed in months. Anything that you can borrow over one to three years are short-term loans. However, there are types of short-term loans such as payday loans that are payable in two to four weeks. Some of the loan terms also ranges from one to three months, depending on the lender you’ll be working with. Short-term loans are typically small amounts, so you can easily pay them in shorter periods. Long-term loans are large amounts that are payable over five to seven years or even three decades.
If you want to get low interest loans, you must also understand the basic types of loans.
Secured loans require you to have a collateral, such as your home, vehicle or any valuable asset to guarantee the loan. In case you default on the loan, the lender can take your property that you put up as collateral, and sell it to cover for the money you owed them. Because of the added assurance and lesser risk involved, secured loans are usually low interest loans.
From it’s name, you’ll know that unsecured loans do not require any collateral. The loan amount, the approval, and the interest rate depends on your credit rating and income. Meaning to say, these loans only depends on your creditworthiness. Having said that, unsecured loans can be low interest loans when the borrower has good credit.
If you have no valuable asset or if you are not willing to use it to guarantee your loan, you can ask a friend or a family member with a good credit history to help you get the loan you need. The guarantor will co-sign your loan, guaranteeing that he or she will make the repayments for you if you fail to do so. This loan is quite popular for those with bad credit or first-time borrowers. Because of the added security or guarantee of the loan, this type of loan is one of the low interest loans in the market.
Majority of banks offer low interest loans, that if you have good credit. If you have an existing account with the bank, you may also be eligible to some of their other loan benefits and discounts.
Always take time to shop around and compare rates of different lenders for you to find low interest loans. Go to comparison sites to make the work faster. Aside from the rates and fees, compare also the flexibility of the loan term and other features of the loan including early repayment. Ultimately, you want make repayments promptly to maintain or improve your credit score. This will ensure that you’ll quality for low interest loans in the future.
If you are not sure of what you are getting yourself into, don’t feel ashamed to seek professional financial advice or learn more about loans. Otherwise, you might end up jumping into more financial trouble. It is worthwhile to learn and understand first what you are dealing with. Don’t rush in choosing a loan if you want to get low interest loans.
305.9% APR. £400 borrowed for 90 days.
Total amount repayable is £561.92 in 3 monthly instalments of £187.31.
Interest charged is £161.92, interest rate 161.9% (variable)
Loanora is NOT a lender – we are a licensed broker working with the most popular direct lenders in the market to find you the most suitable short-term loan plan. Our FREE quoting service compares more than 40 lenders quickly and finds you a lender with the lowest rate that they are willing to lend to you today.
Rates from 45.3% APR to 1575% APR – we provide a no obligation quote, your APR will be based on your personal circumstances