Personal Loans

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Personal Loans
Interest on Personal Loans

The biggest drawback to personal loans is the high rates of interest on personal loans.

Some personal loans interest rates can be as high as 25% or 30%. This can quickly add up because the cost of interest on personal loans is added to the amount the borrower will have to payback. For example a person who takes out a $400 personal loan might have to pay $100 in interest on the personal loan and end up owing the lender $500.

The longer the interest on personal loans accrues the more the borrower will have to pay back. This is why it is important for a borrower to get the best personal loan interest rates possible. The best personal loans rate will usually be the lowest interest rate.

Get the Lowest Interest on Personal Loans

The way to get the best interest on personal loans is to shop around. Compare as many personal loan offers as you can to find the one with the best interest rate.

Obviously the easiest way to find the best interest on personal loans is to do your loan shopping online. Lots of personal loan lenders operate online and do business with people all over the country.

Unlike storefront lenders online lenders are much more likely to make better deals and rates available to borrowers. Many personal loan lenders will give individuals with higher incomes or good credit rates a lower interest rate on a loan. Some lenders will also make a lower interest rate available if the borrower agrees to payback the loan quickly.

Some lenders will also offer lower interest on personal loans if a borrower agrees to put up collateral. Collateral based lenders such as pawn shops will often have better rates than other lenders.

Other Personal Loan Concerns

When you take out a personal loan you should look at much more than the interest on personal loans. Always pay close attention to the terms of the personal loan.

The main term you have to look at is the length of time the lender gives you to pay back the loan. Many personal loans are short term loans that come due within two weeks or a month. When the loan comes due the borrower will either have to pay it off or take out a new loan to cover their debt.

This process can get very expensive because many lenders charge a hefty fee every time a person takes out a new personal loan. Taking out several loans can add several hundred dollars to the cost of a personal loan.

Other Types of Loans

One thing that everyone who is considering getting a personal loan should keep in mind is that other kinds of loans come with much better interest rates.

Interest rates on home equity loans for example can be as low as 4 or 5% while interest on personal loans can run as high as 25% or 30%. Another advantage to home equity loans is that they may not have be paid back for several years this gives the borrower more time to pay.

Credit cards also come with high interest rates but a borrower only has to pay the minimum on a credit card balance. This means that the borrower doesn’t have to pay the full amount of the money borrowed immediately off.

Collateral based lenders such as pawn shops also often give borrowers much better interest rates and terms than personal loan lenders. There are alternatives to the high interest on personal loans many lenders charge.