Finding the best personal loan rates is now easier than ever. You don’t have to make a special trip to your local bank, find a parking place, wait in line, and then keep calling to get an answer.
The easiest way to compare personal loan rates is to fill out a few questions, check out rate offers, and then fill out a short form. Get a personalized loan offers based on your loan size, repayment period, estimated credit score, loan purpose, and zip code.
How to Compare Personal Loan Rates - APR
When comparing loan rates, you need to take into consideration lender fees, which can vary greatly. Most lenders take an origination fee based on a percentage of your loan. For example, if you take a personal loan for $10,000 and the lender takes a 1% fee, then you pay $100. If the fee is 5%, then you pay $500. Generally, lenders deduct that amount from your loan. So, how does the loan fee affect your overall cost of the loan? Lenders are required to quote a loan based on an annual percentage rate, or APR.
The APR takes into consideration the nominal interest rate, the loan fee, and the repayment period. For example, if you take a $10,000 loan at 8% interest, for four years, and a 1% origination fee, then your APR is 8.54%. If the loan fee is 5%, then your APR is 10.7%. Comparing loans using the APR is simple, but it assumes that you are not paying off the loan early.
Use the Bills.com APR Calculator to compute your monthly payments and APR based on various loan scenarios.
Change the amount, the repayment period, interest rate and lender fees to check your monthly payment and APR for a personal loan.
Qualifying for the Best Rates
Is your credit score the only factor in determining interest rates?
While your credit score is the most crucial factor, it is not the only factor. You can easily see different personal loan rates offered by changing the credit range in the personal rate table. To see how other factors influence your final rate, you need to apply with different lenders.
If you have a weak credit score, some lenders allow you to add co-borrower with a higher score, which will enable you to qualify for lower interest rates. Lenders also look at other factors including your income and debt-to-income ratio (DTI). A stable income and low DTI increase your chances to qualify for lower rates. If you are consolidating debt with a personal loan, your overall DTI won’t immediately change. However, with a fixed payment plan your DTI will decrease as you pay off your debt.
There are other ways to get lower rates. For example, FreedomPlus, a sister company of Bills.com informs its borrowers, that,
“Adding a co-borrower with sufficient income; using at least eighty-five percent (85%) of the loan proceeds to directly pay off qualifying existing debt; or showing proof of sufficient retirement savings, could help you also qualify for the lowest rate available.”