If you find yourself strapped for cash and need the immediate payment for emergencies like medical expenses, car repairs, home fix-me-uppers, or even a much-needed push for your start-up, personal loans provide financial relief in more ways than one.
After all, a personal loan is a short-term loan, typically paid back within one to two years and can be applied for online through a mortgage lender.
The best part about a personal loan is that you can get one even if you have bad credit—which means you can still qualify even when other financial services can’t help you. But this begs the question—what is the ideal personal loan interest rate you should aim for when applying?
What’s a Good Personal Loan Interest Rate?
When it comes to determining how much to loan and at what interest rate, there’s no easy answer. It depends on the type of loan, the borrower, and the range of factors beyond the scope of this article. However, the personal loan interest rate for mortgages falls within a few key ranges.
If you’re looking for a personal loan, any lender you’re considering should be able to provide you with a range of interest rates to help you make a decision on which personal loan is right for you.
With that in mind, there are several types of personal loans to choose from, including cash advances, auto loans and credit cards, each with a different interest rate. So what factors do you need to consider when comparing interest rates?
Factors You Should Consider When Comparing Personal Loan Rates
- Annual Percentage Rate (APR) – The APR is the annual rate of interest you pay on a loan, and it’s expressed as a single-year percentage. For example, if you take out a loan with an APR of five per cent, the interest you pay throughout the year will be five per cent.
- Loan Term – The loan term refers to the length of time you have to pay back the loan. Commonly, a loan term is expressed in months. Borrowing money over a longer period of time means paying more interest because you’ll be paying interest for a longer period of time. This is true for both fixed-rate and variable-rate loans.
- Discounts Available – When you’re comparing personal loan rates, always check to see if there are any discounts available. For example, secured loans often offer a lower rate than unsecured loans. Some lenders may also offer a lower interest rate if you can bring existing high-interest debt with you to use as collateral.
- Monthly Payment – Depending on your needs and situation, a lower loan interest rate may not always be the best option. For instance, say you’re interested in taking out a personal loan to buy a car. In this instance, your best bet would be to look for a personal loan with a lower monthly payment, since the last thing you want is to struggle to make your payments each month.
For long-term loans, such as a home loan, the best option is typically a fixed-rate loan. These types of loans have a fixed interest rate, so you can rest assured that your monthly payments will stay the same for the life of the loan.
- Fees – Any fees associated with the personal loan can have a big impact on your monthly payment. For example, if you have a small loan amount and you plan to pay it back within a year, a lower interest rate could actually mean a higher monthly payment.
The Bottom Line: Determining the Ideal Personal Loan Interest You Can Afford
No matter what type of loan you choose, the important thing to remember is that you can always negotiate. In fact, even if the interest rate of the loan you choose seems too good to be true, it probably is. Just be thoughtful about what you want and how a lower first payment may affect your long-term financial situation.
Finally, don’t forget that you have options. If you don’t feel like your credit union is providing you with the best possible personal loan interest rate for your needs, you can always shop around for a loan with a better rate by comparing competing personal loan interest rates.
How Can We Help You?
If you’re thinking of getting a ,personal loan, it’s only right that you connect with a reputable loan company to ensure you get the financial assistance and security you require.
Mid-Town Finance has been serving Huntsville since 2000. Our team provides straightforward, fair, and honest loans. With that, we give each individual the opportunity to receive the financial assistance they need.
Inquire about a loan today and see how we can help you!