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Searching for a Cheap Personal Loan

Personal Loans
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There are a number of qualifications that make for a cheap personal loan. If you have good credit, have collateral or a co-signor, those are all elements that make for a cheap personal loan. In each of these situations, lenders will usually charge less for a personal loan - both in the form of any fees and in the percentage rate offered for the loan.

Getting a Cheap Personal Loan

  • Good credit. If your credit score is high, then most lenders will offer their most competitive rates because you offer little risk of defaulting on the loan. Credit scores are 3-figure scores between 300 and 850 that measure your financial status. There are 5 main elements of a credit score and making late payments, maxing out all your credit cards and applying too often for credit are examples of ways to lower your credit score. A credit score above 700 should qualify you for a cheap personal loan.
  • Secured personal loan. There are a number of different loan products to pursue. If you want a cheap personal loan but your credit score isn't extremely high, one way to ensure that the loan cost isn't exorbitant is to offer up collateral in exchange for the loan. That's called a secured loan and typical examples include car loans and mortgages. Lenders like secured loans because the collateral lessens the risk. Even if you run into trouble and default on the loan, the lender has the collateral. That means the lender will offer few if any fees and lower interest rates for secured loans as a way to attract more borrowers to that option.
  • Loan with a co-signor. Even with less than perfect credit and no collateral for a secured loan, a borrower can get a cheap personal loan by finding a co-signor. Of course, the co-signor must have an excellent credit picture. But a lender will offer competitive rates for loans that involve co-signors because of the additional protection offered. If for any reason you can't pay off the loan, the lender can legally require the co-signor to finish paying off the loan.

Shop Around for the Best Cheap Personal Loan

In addition to offering good credit, collateral or bringing in a co-signor, another way to get the best deal available is to check a number of lenders. Compare total fees and the percentage rate offered for a particular loan among several potential lenders. Sometimes, a lender who knows you are comparing their rates with other companies will offer additional discounts for an even better cheap personal loan. Be sure to check all companies with the Better Business Bureau to see how they handle complaints and always ask to talk to a real person if you are searching for lenders online.

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