Low Interest Rate Personal Loans And Where To Get Them
Low interest rate personal loans are what every loan applicant would like to obtain when they are applying for a loan. However, getting cheap financing is not as easy as it may seem even if you have fair or perfect credit. Why do you feel intimidated when you go into the bank to apply for a loan? Why do you have to sit at a desk across from the lending officer of a bank waiting for them to make a decision? Why is it that so many people have a difficult time finding a bank or lender that will loan them money for home improvements, car loans or even debt consolidation?
Why Consumers Cannot Obtain Low Interest Rate Loans
There are many reasons. Many people actually have a poor credit rating and do not even know it. They may think that their credit rating is good to excellent when in reality it is not. They may have a mortgage, perhaps a car loan and 4 or 5 credit cards. They probably pay their credit cards on time as well either to make sure they do not pay any interest on the unpaid balance or just because they do not like this kind of debt.
The problem is that they have too many credit cards with too high a limit, which leaves them very exposed if they should charge these credit cards up to their limit. This is what a lot of people end up doing either because they have lost their jobs and cannot pay or they have a shopping problem and do not know how to manage their debt. Once you have a bad credit rating it is very difficult to find low interest rate personal loans. Lenders view the potential debt that you can take on with your credit cards as a risk area and your credit rating will reflect this risk. Try to avoid having a lot of credit cards and keep the limits at a reasonable level as well.
High Net Equity, Little Income
There is another category of people who find it difficult to obtain personal loans. These might be the last group of people who you would ever suspect to have a problem finding low interest rate loans. These are middle age people or seniors who have a high net equity, but do not have a lot of income. Even if they have relatively high investment income, many lenders do not count this due to the perceived high risk associated with investments. Some lenders just will not consider your application for a low interest rate loan if you do not have regular employment income. Seniors who own their own home, living on their pensions may actually be worth a lot of money based on the value of their homes. Their income level may be relatively low even thought they have a high net worth. Low incomes are another limiting factor for personal loans that may limit whether you are approved for a loan and may also limit the size of a personal loan that you can be approved for.
Small Business Owners
Another group of people who have difficulty finding low interest rate loans are small business owners. These people are entrepreneurs who are running a business and drawing income from the business to support their every day personal expenses. As revenue and expenses vary so does their income and sometimes they will need a personal loan to get them through a tough spot. They can be approved for a loan, but not always at an interest rate or term that meets their needs or is as competitive as they feel it should be. Self employed consumers routinely have a difficult time being approved for personal loans due to the perceived high risk of their incomes. They may have to provide copies of their previous years income tax forms to help justify their income and qualify for a personal loan.
Where to Get Low Interest Rate Loans
Like anything else that you may purchase, sometimes you have to shop around to find the best deal. It does not matter whether you are buying a car or a coffee maker. Loans are the same and consumers need to take the time to shop for the best personal loans and not just go to their regular bank. Compare costs and products carefully. Take into account the interest rate of course, but also the term of the loan and any associated fees that will be added onto process the loan. Find out what the total cost of personal loan is going to be over the life time of the loan and use these numbers from different lenders to compare before you make a decision.
Comparison shopping for personal loans can sometimes help you to find the lowest interest rate personal loan. Comparison shopping takes time which many consumers just do not have with their busy lives. Another alternative to shopping for a personal loan on your own is to use the services of a broker. A broker’s job is to keep abreast of current interest rates and loan products that many lending companies offer. It is their job to find the best interest rates and the best personal loan deals for their clients, as well as mortgages and other financial services that consumers may need from time to time.
When you use a broker to find a personal loan or a mortgage, they receive a finder’s fee from the lender for qualifying you for the loan, so there is no cost to the consumer. The broker will ask you for all of the normal information that any lender would ask for. They use this information to canvas lenders and select lenders who offer loans that match your needs as well as your financial profile. In other words they can save you a great deal of time and demonstrate to you that you are actually getting the best deal for a personal loan.
If you are still not satisfied or perhaps unsure about whether the broker has found the best deal for you, many consumers will apply for a personal loan at their local bank and then compare the rate and terms offered by the bank with those that the broker has found on your behalf. This approach gives many people peace of mind when they know that they actually received the best deal by using a broker to help them find a personal loan.