Couple applying for low rate loan

How to get a low-interest personal loan

Need a personal loan? A low interest rate can help you save a lot of money over time.

One of the key differentiating factors for personal loans is the interest they charge, since this feature plays a crucial role in the cost of any loan. If you’re considering applying for a low-interest personal loan online or in-store, going through this guide will help you make an informed decision.

Laurel Road Personal Loans

Laurel Road Personal Loans

Get a personalized rate offer through a quick online application. Recommended for people with annual income of $60K+ and debt of less than 40% of their income.

  • Min. Credit Score Required: 680
  • Min. Loan Amount: $1,000
  • Max. Loan Amount: $45,000
  • Starting APR: 5.5%
  • Loan Term: 3, 4 or 5 years
  • Rate discounts for autopay
  • No prepayment fees

    What’s considered a low-interest personal loan?

    A low-interest personal loan is a term loan that comes with an annual percentage rate (APR) below 12%. It works like any other personal loan: It’s money you borrow to cover an expense, which you pay back plus interest and fees. The main difference is that they tend to cost less than your average personal loan, thanks to the low interest rate.

    To qualify for a low-interest loan from most traditional lenders, you typically need to have credit score above 720 and a strong financial history. It also doesn’t help if you need a larger loan amount — lenders can’t make as much profit as they’d like from a $1,000 loan with an APR of 4%.

    Doesn’t sound like you? You still have low-interest options. Those without excellent credit might want to look at loans secured with collateral or borrow from credit unions or peer-to-peer lenders, which tend to offer lower rates than other direct lenders.

    Who gets the lowest rates?

    You might think that all you need to get that 2.99% APR is a reasonably good credit score, but the truth is that very few people can qualify for a lender’s absolute lowest rate.

    Lenders only offer these low rates to ideal candidates: People who borrow over a certain amount, have a six-figure income and almost no debt. In other words, the kind of person that probably doesn’t need a loan. The average interest rate for people with excellent credit is actually just around 9%.

    How does applying for a low-interest personal loan work?

    If you find a personal loan you’re eligible for, you can either apply online, in person or over the phone, depending on your lender. Many online lenders have pre-qualification options, which give you an estimate of what type of interest rates you might be eligible for without a hard credit check.

    After you submit your application, an underwriter (or underwriting software) reviews your file and pulls a hard credit check — which will cause a temporary dip in your credit score. At this point you might be asked to submit additional documentation like bank statements, tax forms or pay stubs.

    If you’re approved for an online personal loan, the money is transferred into your bank account electronically. You then have to make repayments on a monthly basis until your loan is paid off..

    Top three providers for low-interest personal loans

    Provider Name Starting APR Min Loan Amount Max Loan Amount
    Even Financial Personal Loans 4.99% $1,000 $100,000 Go to site More
    Laurel Road Personal Loans 5.5% $1,000 $45,000 Go to site More
    Prosper Personal Loan 5.99% $2,000 $35,000 Go to site More

    5 tips for geting a low interest rate on your personal loan

    Top personal loans you can apply for today

    Rates last updated December 13th, 2017

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    Unfortunately, none of the personal loan providers offer loans for that credit score. If you are in urgent need of a small loan, you might want to consider a short term loan.
    Name Product Product Description Min. Credit Score Max. Loan Amount APR Requirements
    Laurel Road Personal Loans
    Get a personal loan with no application or origination fees and a rate discount for autopay.
    680
    $45,000
    From 5.5% (fixed)
    Must be a US citizen or permanent resident with a valid I-551 card. Best for people w/ 680+ credit scores and $60,000+ annual income.
    Even Financial Personal Loans
    Get connected to competitive loan offers instantly from top online consumer lenders.
    580
    $100,000
    From 4.99% (fixed)
    Must have a minimum credit score of 580+. Must be 18+ years old and be an American citizen or permanent resident.
    LendingClub Personal Loan
    A peer-to-peer lender offering fair rates based on your credit score.
    660
    $40,000
    From 5.99% (fixed)
    You must be over 18 years of age, a permanent resident of the US or an American citizen and have a steady source of income.
    Prosper Personal Loan
    Borrow only what you need for debt consolidation, home improvements, special occasions and more — with APRs based on your credit score.
    640
    $35,000
    From 5.99% (fixed)
    Must be 18+ years old, an American citizen or US permanent resident and have a 640+ credit score.
    SoFi Personal Loan Fixed Rate (with Autopay)
    Borrow up to $100,000 with a competitive APR and no fees.
    Good to excellent credit
    $100,000
    From 5.49% (fixed)
    You must be a US citizen or permanent resident, and 18 years or older.
    LendingPoint Personal Loans
    Get a personal loan with reasonable rates even if you have a fair credit score in the 600s.
    600
    $25,000
    From 15.49% (fixed)
    Must have a fair credit score of 600 or better and verifiable income. Must live in a state where LendingPoint services.
    NetCredit Personal Loan
    Check eligibility in minutes and get a personalized quote without affecting your credit score.
    550
    $10,000
    From 34%% (fixed)
    Varies depending on your state of residence.

    Compare up to 4 providers

    Things to consider besides interest

    Interest is important , but it’s not the only thing that makes a loan competitive. Compare these other features when looking for a personal loan:

    • Loan security. If you cannot provide any collateral, your options are limited to low-interest unsecured personal loans. By providing some kind of security you can get a lower APR.
    • Loan amount. Different lenders offer low-interest unsecured personal loans for amounts from $500 to $50,000. The maximum you can borrow depends on your creditworthiness, your existing financial situation and your ability to make repayments.
    • Loan fees. Many online loans come with origination fees — typically between 1% and 5% of your loan amount — which is factored into your APR. There are other fees you might want to look out for that don’t get included in your rate, such as prepayment penalties, late fees or nonsufficient funds fees.
    • Loan term. Getting a loan term that matches your requirement may be easier than you think. You can normally find low-interest personal loans with terms from two to seven years.
    • Processing time. If you need money in a hurry this aspect requires particular attention. Certain lenders can give you access to funds on the day you apply, or by the next business day. For others, you may have to wait for as long as seven to 10 business days.

    Where can I find a low-interest personal loan?

    In your search for low-interest personal loans you’ll come across these options:

    • Peer-to-peer lenders. Peer-to-peer lending is gaining popularity in the US. Lending platforms that offer peer-to-peer personal loans connect investors with borrowers. With good or excellent credit rating you can get competitive interest rates.
    • Credit unions. Credit unions don’t have any shareholders so they transfer their profits to their members through competitive interest rates and little to no fees. Not all credit unions offer membership to the public at large.
    • Secured loan providers. Some lenders allow you to secure your personal loan with collateral. In return, you’ll pay a lower APR.
    • Banks. If you have excellent credit, you might be able to qualify for a low-interest bank loan. You might even be eligible for a discount if you already have an account with them.

    Consider these benefits and drawbacks before applying

    • Savings. If you take a low-interest personal loan that you wish to repay in a few years, you can end up saving a tidy sum in interest.
    • Easy process. With widespread usage of the Internet, getting a personal loan has become considerably simpler. You can now apply using any Internet enabled device, and some lenders provide apps for mobile devices as well. Many lenders let you complete the identification process online.
    • Repayment flexibility. You can find lenders that let you make payments as per your pay schedule, be it weekly, fortnightly or monthly. Some let you repay your loan early without charging any extra fees or penalties.
    • Prepayment penalties. Find out if you may have to pay prepayment penalties because these can put a dent in your plans if you plan to repay your loan ahead of time.
    • Scams. The online world is not devoid of unscrupulous characters. Before you apply for a low-interest personal loan online find out if the lender you choose is legitimate by contacting the Federal Trade Commission and the Better Business Bureau.
    • Bad credit is a problem. Finding low-interest personal loans for bad credit is near impossible, unless you consider getting a secured loan.

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    2 Responses

    1. Default Gravatar
      NirbhaiSeptember 26, 2017

      Hello. Please suggest on how can I get full amount of loan that I need. Please help me.

      • Staff
        JhezelynSeptember 29, 2017Staff

        Hi Nirbhai,

        Thank you for your comment.

        The amount of funding that you can borrow will depend on several factors that include your credit score and the purpose of the loan. The maximum you can borrow depends on your creditworthiness, your existing financial situation and your ability to make repayments. You should check with the lender on how much is the maximum amount they can lend you.

        Regards,
        Jhezelyn

    US Personal Loans Offers

    Learn about our information service
    Even Financial Personal Loans

    Get connected to competitive loan offers instantly from top online consumer lenders.

    Prosper Personal Loan

    Borrow only what you need for debt consolidation, home improvements, special occasions and more — with APRs based on your credit score.

    LendingClub Personal Loan

    A peer-to-peer lender offering fair rates based on your credit score.

    SoFi Personal Loan Fixed Rate (with Autopay)

    Borrow up to $100,000 with a competitive APR and no fees.