What to do if you’re not offered a good personal loan interest rate
If you’re only being offered personal loans at very high rates — above the national average rates — you need to consider why.
Your priority should be to find out if there’s something in your borrower profile that is a red flag for lenders, such as a low credit score or insufficient income. If that’s the problem, you either need to improve your credit or earn more income — or get a cosigner to vouch for you. If you have bad credit, for example, you can get a much better rate if the cosigner has a high credit score.
You can also get a lower rate by putting up collateral, like a bank account or vehicle. A loan with collateral is called a secured loan (a loan without collateral is called an unsecured loan). Secured loans often have lower interest rates, but be careful: the lender can take your collateral if you miss a monthly payment.
If you’re a well-qualified borrower and aren’t being offered a loan at a good rate, you may simply need to shop around to see if another personal loan lender can offer a competitive rate. You can also consider borrowing for a shorter period of time or borrowing a bit less money so you present less of a risk.
The bottom line
What is a good interest rate for a personal loan? It’s the lowest rate you can get with your credit score and financial situation. The lower the rate you pay to borrow, the more you can save on your loan. If you’re a reasonably well-qualified borrower, always be sure to compare rates from different lenders and look for rates at or below the average. That way you won’t pay more than necessary to for your personal loan.
Still have questions?
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View more information: https://www.fool.com/the-ascent/personal-loans/what-is-good-interest-rate-personal-loan/