There are a number of reasons for different people to seek personal loans. These could be paying for ongoing education, buying a vehicle, for carrying home improvements and such like routine expenses that a normal householder may be unable to pay in cash. Some people consolidate personal loans to reduce their debt. Getting personal loans with a minimum annual percentage rate (APR) helps to save a substantial amount of money. The reason is not difficult to guess, the loan payments which a borrower makes in a given time are reduced. Some of the best ways for getting personal loans carrying the best APR rates are mentioned here to help you save the expense of your debt:
- Have a good credit score: The most helpful way of paying the minimum amount towards interest on borrowed funds is to possess a good credit score. The APR for borrowers with high credit score is automatically lowered. So, you need to find out your credit score. Assess your present FICO score to find out how risky you may appear to a lender. If you lack a good score, you may have to use some targeted credit application, negotiate with creditors or use some other sources to improve your credit score, enabling you qualify for a lower APR.
- Securing your loan: You should understand that if your loan is secured, you will be charged a low APR. You may use your personal assets for securing a personal loan. The usual personal assets that lenders accept include your home or car. The limitation of secured loans is the fact that, in case you fail to repay the loan in time, the lender has the option of disposing your assets in a manner that suits him.
- Assess your options of lenders: Do not restrict your choice of lenders to big reputed lenders alone, who could offer you a personal loan with low rate of interest. Explore the possibilities of peer-to-peer lending and micro lending. With this kind of lending arrangement, you may find someone willing to lend you your total requirements, charging you an APR that would be lower than the market rate.
- Try getting informal loans. It is not unusual to have helping friends and members in the family who can offer you smaller amounts of money as loans. They may not charge you interest, but it is good to offer them some affordable rate of interest and thus enhance the likelihood of getting the loan.
- Explore options provided by government: Certain government plans are already in place, offering loans to borrowers with low-income and charging low rates of interest. It is worth trying to get personal from these sources.
Assess the terms of making prepayment. Certain lenders would charge you penalties if you can manage to pay back the loan before the scheduled date. Certainly, you would not like patronizing loans with such a clause. You should also ensure that you'll be charged the same rate of interest for the entire duration of the loan. Some lenders charge adjustable rate of interest, which may be low in the beginning but increases substantially in due course of time. APR with a fixed rate of interest is often the best choice for people seeking personal loans.