3 Tips for Obtaining the Best Personal Loan Rates

Try these three simple steps to the best personal loan rates: keep your limits low, offer up collateral and repay the loan fast.

#1 Low Limits

When you are pre-approved for a loan, the lender is often telling you the absolute maximum it is willing to provide. If you take this amount, the lender is assuming a high degree of risk. It will charge a higher interest rate as a result. Instead, take a slightly lower limit. You will save money in interest rates.

#2 Secured Debt

Secured loans make use of collateral to reduce a lender's risk. If you default, you can lose your asset. For this reason, it is not wise to place down an asset if you feel you have a high chance of loan default. On a relatively small personal loan, however, placing an auto title, a stock certificate or a savings account as collateral will save you money and be worth the added risk to you. 

#3 Short Loan Term

The faster you pay off your loan, the fewer times the interest will compound. You will also find lenders are more more apt to give low interest on short loans because they do not have to compensate for inflation risks.