Interested in a Personal Loan?
With a solid repayment plan and manageable rates, a personal loan can be a great way to organize your finances.
For consumers with high credit card balances, using a personal loan to consolidate and eliminate debt can be an effective way to transition into a more reliable and affordable interest rate.
One of the first questions to ask yourself before applying for a personal loan is whether you can afford the interest rate over the long term. Finding the best personal loan rates is crucial for setting a foundation for financial success and security, rather than increased debt.
Unsecured vs. Secured Personal Loans
When it comes to personal loans, there are two types of loan structures to choose from—unsecured and secured.
An unsecured personal loan is like signing up for a line of credit—you don’t need to put down any collateral to get a credit card. This means that if you default on the loan, the lender cannot seize your property.
Unsecured loans tend to have stricter credit score requirements, so it’s important to know your credit score before applying.
In contrast, a secured loan is connected to a piece of personal collateral, like a vehicle or a home. If you default on a secured loan, the lender can make up for the loss by seizing whatever collateral was attached to the loan.
Most traditional personal loans are unsecured—like student loans—but you may find that a secured loan offers the most affordable rates. Additionally, for borrowers with less than favorable credit, a secured loan is often the only option.
Because the risk is not as high with secured loans, lenders tend to set more affordable rates. As an additional benefit, they also commonly come with more flexible terms and higher borrowing limits.
Where to Find Personal Loans
There are plenty of different lenders to choose from for personal loans, which means you have multiple sources for the best personal loan rates.
Personal loan rates can vary greatly from one lender to the next, depending on the type of loan and personal factors like credit score and income.
Depending on your unique financial situation, you may find that one of the sources below will provide the best terms and the best personal loan rates.
If you have an existing relationship with a local bank, you may want to check their rates for personal loans. Having a positive lending relationship with a brick-and-mortar bank can be valuable for those who prefer in-person meetings to discuss rates and terms.
Keep in mind, however, that new lenders may have difficulty taking out personal loans from large banks. This is particularly true for lenders with less than ideal credit, as banks tend to have stricter credit requirements.
Online lenders are growing in popularity, and many consumers find the best terms and lowest rates through online lenders. There is plenty of room for variation in online lenders, like online-only banks, lending companies, or even peer-to-peer lending platforms.
Along with variation, it’s hard to argue against the sheer convenience offered by an online lender.
Not only are loan applications easier to fill out, but they also tend to have the quickest response rates, meaning that you could potentially get an answer within hours.
If you are a member of a credit union—or are eligible to become one—a credit union can be a great resource for affordable personal loans.
Because credit unions tend to have lower operating costs, their personal loan products often have competitive rates and flexible terms.
Compare Personal Loan Rates
It’s tempting to sign up for the first affordable loan rate that you find, but locking in the best personal loan rates is best done through comparison.
Taking out a personal loan is a significant commitment, and you’ll want to make sure that you find the best lender to suit your unique financial needs and goals.
Choose a few lenders and compare their rates, terms, requirements, loan amounts, and overall reputation before making a decision.
Using the lenders listed above is a great starting point to help boost your financial stability, consolidate credit card debt, and set yourself up for a strong financial future.
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