Based on financial language, a loan refers to the funds one or more individuals, organizations, or entities borrow from other people, financial institutions, organizations, etc. as a recipient, you incur a debt when you get a loan. You are usually required to pay interest on the debt until you completely repay the borrowed amount. In short, you pay the principal plus the interest charged on the borrowed amount. We shall look at the best low-interest personal loans later.
We have different types of loans that you can borrow from financial companies. Among them, is the personal loans. Others include auto loans, student loans, home equity, etc. A personal loan is a money you borrow to use for various purposes. You can get a personal loan to renovate your home, purchase food, buy clothes, and pay emergency medical bills. Personal loans are usually in small amounts.
Interestingly, personal loans may require a few processes to get them. You may not need a guarantor, especially if you have good credit scores. Also, personal loan processing is faster. By the way, some financial companies can process and approve a personal loan within two days. That makes it convenient to fund emergencies such as medical bills, abrupt need to travel, and purchase of food. Above all, a personal loan can help you consolidate various loans into one entity for easy management.
Read Also: Best Ways To Get Zero Interest Personal Loans
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Best ways to Get a Personal Loan With Low-Interest Rates
When getting a personal loan from any source, it is paramount to check the interest rates charged. If you are not keen on the rates, you may pay a lot of money when repaying your loan. Getting a loan with the lowest interest should be your priority, although the eligibility factor must pop up. By the way, the primary determinant of a low-interest loan is your credit score. You will likely find a low-interest loan if you have high credit scores.
Consider the following to get a low-interest loan. They include:
1. Verifiable income
You must have a consistent source of money so your lender can predict the amount you get every month. That guarantees the lender that you will return your loan. Since your source of income will act as security, you will get a low-interest personal loan from most lenders.
2. Employment history
Every financial company requires some verifiable income. Therefore, having an employment history of several months to a year or so can guarantee you a low-interest loan. The lender will be confident that you will repay your loan with ease.
3. Credit scores
Credit scores refer to your creditworthiness. The scores range from 300-850, where 300 represents the worst and 850 represents the best. If you have excellent scores, lenders will give you low-interest personal loans. However, people with low credit scores are likely to suffer since most financial institutions charge high loan rates.
Read Also: How To Get 800 Credit Score
4. Deposit money for security
Suppose you need a personal loan to build your credit scores. In that case, you can deposit an amount to act as security, then borrow against it. With the deposit, you will get a low-interest loan since there is a low risk. If you do not repay your loan, your lender will get the deposit to recover their money.
The Importance of Low-interest Personal Loans
Low-interest personal loans however have numerous advantages that you can enjoy. They include the following.
- Helps you repay lower amounts.
- Low rates reduce the repayment time.
- Low moving costs in case you want to relocate.
- Helps you to fund your emergency financial needs.
The Most Attractive Best Low-interest Personal Loans Providers
If you are looking for the best personal loan, then you have come to the right place since I have researched the best low-interest personal loans with low interest to guide you on your loan application process. They include the following.
1. LightStream: Eligibility, reasons to pick, pros & cons
The loan is best for debt consolidation, auto financing, medical expenses, home improvement, wedding, and others. It charges an Annual Percentage Rate (APR) of 5.99% to 21.49% when you register for autopay. Loan amounts range between $5,000 to $100,000 with terms of 24 to 144 months. You require good credit to get the loan.
Pros
- Low rates
- Large amounts to borrow
- No late payment
Cons
- High credit requirement
2. SoFi: Eligibility, reasons to pick, pros & cons
SoFi charges an Annual Percentage Rate (APR) of 7.99% to 23.43% if you sign up for autopay. You can get loans of between $5,000 to $100,000, with payment terms ranging from 24 to 84 months.
Pros
- A bit long repayment time
- High amount to borrow
- No origination fee
- No late payment fee
Cons
- Good to excellent is required.
3. Marcus: Eligibility, reasons to pick, pros & cons
Marcus charges an Annual Percentage Rate (APR) of 6.99% to 24.99% APR if you sign up for autopay. You can get loan amounts of $3,500 to $40,000. Repayment terms are from 36 to 72 months.
Pros
- No origination fees
- Does not charge late payment
- No payoff penalty
Cons
- Requires good credit
Read Also: How To Improve A Credit Score
4. PenFed: Eligibility, reasons to pick, pros & cons
The loan gives you rates as low as 7.74% APR and repayment terms of up to 60 months. You can get loans of up to $50,000. The loans do not have origination fees.
Pros
- No origination fees
- There is no early payoff penalty
- No hidden fees
Cons
- High scores
5. U.S. Bank: Eligibility, reasons to pick, pros & cons
U.S. Bank members should have scores of 660 or higher to qualify for personal loans. Non-members may need higher scores to get the loans. You can get an APR as low as 8.24% and borrow between $1,000 and $50,000. The repayment term is 12 to 84 months.
Pros
- No hidden costs
- There is no need for a collateral
- Easy application
Cons
- High score requirement
6. Wells Fargo: Eligibility, reasons to pick, pros & cons
Wells Fargo’s personal loans require a credit score of 660+. You can borrow between $3,000 to $100,000 with flexible terms from 12 to 84 months. The bank charges rates as low as 5.99% APR.
Pros
- Low APR
- No origination fee
- Charges no closing fee
- No prepayment penalty
Cons
- High score requirements
Read Also: Best Credit Unions For Personal Loans
7. Discover: Eligibility, reasons to pick, pros & cons
You can get a loan of between $2,500 to $35,000 and pay the loan between 36 – 84 months with a fixed interest rate ranging from 6.99% to 24.99% APR. The loan requires a credit score of at least 740.
Pros
- no up-Front Fees
- Fast approval
- Flexible terms
Cons
- High scores
Factors Affect Your low rate Personal Loan Rate
A number of factors do affect your interest rates on personal loans. They include;
- Your scores
- Employment status
- Whether you have an account with an institution or not
- Where you borrow the loan
How to Get Low-interest Personal Loans With Bad Credit
Best Low-Interest Personal LoansYou can get a low-interest loan to build your credit if you have poor credit. There are several ways for this. They include the following.
- Deposit some security
- Get a guarantor
- Get a Home Equity loan
- Opt for online lenders
Conclusion on the Best Low-Interest Personal Loans
A personal loan is the funds you borrow to use for various purposes. You can get a personal loan to renovate your home, purchase food, buy clothes, and pay emergency medical bills. Personal loans are usually in small amounts. You can get a low-interest personal loan if you have good credit scores, have a cosigner, or deposit security to borrow against.