Tips for Finding Better Online Personal Loan Rates
By Space Coast Daily // December 3, 2020
You can find plenty of advice on how to avoid fake loan websites. For example, websites that guarantee that they’ll extend a loan or lack a physical address for the place of business are certainly fake. If the website lacks an HTTPS in the URL or causes phishing warnings to come up, it should be avoided.
But that leaves you with all of the other online lenders to contend with. How can you find the best loan rates among them? Here are our tips for finding better online personal loan rates.
Stay Away from the Most Expensive Loan Options
If you want a low-interest rate on an online loan, stay away from financial products known for charging a fortune. Do not take out a payday loan, a loan that is secured by your paycheck.
Their 10 to 25 percent interest is per pay period, not per year. You’d pay more than 400 percent interest if the loan were renewed because you couldn’t pay it off.
And most people cannot pay it off when it comes due. To add insult to injury, they pay a fee to roll over the loan balance into the next pay period. They end up owing far more than they ever borrowed. It is honestly better to take out a cash advance on a credit card than get a payday loan.
Title loans are just as much of a rip-off. They charge anywhere from 10 to 30 percent interest. This isn’t an annual rate but the interest rate they charge on the one to two-month loan term. This translates to more than 200 percent a year. If you borrowed 1,000 dollars using a car title loan and can’t pay it off the first month, you could end up paying back up to 2,000 dollars in interest.
Lenders like these will prey on the desperate, and they’re barely better than identity thieves who set up fake websites supposedly guaranteeing to offer a loan to someone with bad credit.
Know the warning signs that a website is a scam because you can’t afford to have your bank account drained by a thief. For example, no legitimate lender is going to send salespeople door to door or send you generic bulk mail inserts.
No real lender demands prepayment of fees to do business with you. Another warning sign is when they demand that you “pay” them with prepaid cash cards or gift cards. For example, no real online lender is going to ask you to pay your loan payment via Amazon.
It is surprising how many people will shop around for the best car given their needs but won’t comparison shop on auto loan rates, though this can cost them thousands of dollars over the life of the loan.
The same is true if you’re applying for an unsecured loan online for any other purpose. The difference between 10 percent and 12 percent adds up every month you’re making payments.
The differences literally multiply if you have a revolving line of credit like a credit card or have to renew the loan because you can’t pay it off.
It can be time-consuming to create a list of lenders and then compare interest rates. The solution is to use portal websites that vet lenders and present them to you in an easy-to-compare format. You can find the best personal loans rates here at Match Financial.
Manage Your Risk and Theirs
The interest rate on a loan is proportional to the risk the lender thinks they are taking. If you have bad credit, they will charge a higher interest rate because of the greater odds that you fail to make the payments on time and in full.
How can you manage the risk involved, if you’re about to apply for an unsecured loan? After all, you don’t have the time to clean up your credit.
One option is giving them the ability to sweep your bank account for the monthly loan payments. Then they don’t have to worry about whether or not you’ll write a check or make a bank transfer to pay them on time. However, some lenders don’t give you this choice, especially if you have bad credit.
Note that they may pull the payment from your bank account before other deposits have cleared. Arrange for the lender to take money out of your checking account the day after your paycheck deposits, not the same day. This prevents overdrafts that can cost you 20 to 50 dollars in fees.
Another option is having a co-signer. This is only possible if you have a cosigner. It is only practical if the cosigner is able and willing to make the payments if you cannot.
If they lack the funds to pay the late payment, you’re still in default and both of your credit reports take a hit. If someone can pay but decides not to do so out of spite, you’ll pay for it in collection costs and higher interest on your remaining loans. Never list someone as a co-signer without their explicit consent, because that can lead to fraud charges.
Get on Top Of Your Bills
You do not have to live a life defined by payments. Get on a budget, get control of your money, and start paying down your debt. Cut expenses, if necessary.
Don’t feel guilty about saying no to your kids and people who borrow money without ever paying it back. Stop excusing excessive spending as retail therapy or something you deserve for working so hard.
You may have to make major changes in your life to lower expenses to a point below what you’re bringing in. It may mean driving your car for another few years or pursuing your ex for back child support.
It may mean saying no to invitations to go on trips and out for an evening on the town. It could mean canceling subscriptions and automatic donations to charity. However, it is insane to go deeper into debt to feel good about giving or buying things to impress others.