Personal loan interest rates near historic lows – get one now
If you’re in a rush and need cash quickly, you may want to consider taking out a personal loan. Personal loan interest rates are close to all-time lows. And they offer flexibility – you can apply for different loan amounts and use the funds at your discretion.
However, finding the best personal lender and a personal loan rate that matches your needs will take a little research. Fortunately, online marketplaces like Credible make the process easier. With Credible you can compare rates and find a lender online in minutes.
What is a good interest rate on a personal loan?
Typically, a good interest rate on a personal loan is lower than the national average – currently it is around 9.5%. But that number fluctuates.
The coronavirus pandemic prompted the government to cut the federal funds rate near zero in March 2020 to help the economy. This decision had an impact on the way banks set the terms of their fixed interest rate and variable interest rate loans.
According to Credible, personal loan interest rates currently range from 4.99% to 35.99%. But with Credible’s free online tools, you can find different durations and prices from 4.99% APR in just 2 minutes. Checking rates will not affect your credit and there are no hidden charges.
How to get approved for a personal loan?
Unlike a car or home loan, personal loans are unsecured, and lenders will look closely at certain financial factors when making their approval decision and setting the terms of your loan. Boost your chances get your loan application approved by improving these three things:
- Credit score
- Credit history
- Debt-to-income ratio (DTI)
1. Credit score: One of the most critical factors will be your credit score or FICO, which measures your financial past and helps lenders assess their risk in lending you money. Lenders prefer borrowers with higher scores. A good credit score will range from 700 to 749, and an excellent score is 750 and above. Borrowers with fair credit, which is a score of 640-699, can still be approved but will likely pay a higher interest rate.
For a personal loan of $ 100,000 or more, you will likely need a credit score of at least 720. To see if your credit rating is good enough to qualify for a personal loan, you just need to enter your estimated credit score in Credible’s free tools, as well as your loan amount.
2. Credit history: Your credit score is in part based on your credit history. A credit score is assigned by one of the three credit bureaus and is calculated based on your payment history, amounts owed, length of credit history, credit composition, and credit history. new credit.
3. Debt-to-income ratio (DTI): Another factor that a lender will take into consideration is your debt to income ratio. This ratio is calculated by adding up your total debt payments, including credit card bills, car and student loans, mortgage payments, and personal loans, and dividing the number by your gross monthly income. Lenders prefer borrowers who have a DTI of less than 40%, which indicates that they can take on an additional payment without putting too much strain on their monthly budget.
Before applying, you can use a personal loan calculator to determine the monthly payment that a personal loan would create, calculate your DTI and assess its impact on your budget.
Why should i get a personal loan?
Personal loans offer more flexibility than other types of loans that you take out for a specific purpose, such as buying a car or a house. In fact, borrowers may have a variety of reasons to consider one, like:
- Debt consolidation
- Big purchases
- Unexpected invoices (medical or automobile bill)
- Home renovation project
The interest rates for personal loans may be lower than for other types of financing. For example, the average credit card interest rate is 14.52%, according to the latest figures from the Federal Reserve, making a personal loan a more affordable way to finance a purchase.
Make the best choice for your unique situation by visit a site like Credible to explore your personal loan options and locate the best personal loan rates.
Another reason why a personal loan can be attractive is that most are unsecured and require no collateral, which can be useful in an uncertain economy. Although the interest rates on a home equity line of credit may be lower than on a personal loan, depending on your credit history, you are putting your home at risk if you cannot make a payment.
A personal loan is also a suitable type of loan vehicle if you are trying to build or repair your credit score. As long as you make your payments on time and don’t negatively impact your DTI, you can improve your FICO score over the life of the loan, making future borrowing easier and more affordable.
The gist of personal loans is this: When used responsibly, they can help borrowers by providing the necessary funds at a low rate of interest. The most crucial step is to make sure that you can repay the loan. Use a personal loan calculator to determine the monthly payment for the personal loan, then think about its impact on your budget.