Getting the Best Personal Loan Interest Rate

Many people looking for a personal loan make the mistake of going with the bank they currently use for a personal account or their mortgage. Being a customer already does not automatically give you an interest rate lower than someone who does their banking elsewhere. Due to the current economic financial climate the banks are extremely careful who they lend money to and would rather lend to a complete stranger providing their credit report and financial standing are more suitable than a regular customer.

One of the most common problems when applying for a loan is getting a low rate quote just for a general enquiry. You will find that the more you borrow over a longer period means that rate comes down. The opposite normally applies when looking for a smaller loan over a shorter period. If you make a simple enquiry at your ban for a loan they will only give you general rates as a guide. These may not be the rate you get after credit checks and the completion of the loan application have been finalized.

Now the problem here is the more times you process a loan application looking for the best rate that includes credit checks will start to have a detrimental effect on your overall credit score. Its amazing isn’t it that you should get punished just for going through the entire loan process that will give you the cheapest loan rate. The more loan applications you do will mean that your credit report will become affected which means that you will always get a poor rate.

The best way to ensure you get the best personal loan interest rate is to do your homework first before you contact any bank. The compare web sites are an ideal place to start and is ideal because you can input all your data just the once and then wait for the results to be processed by the compare web sites. Now it has to be said that the rates you are quoted are not set in stone. If you wanted to take it further it mean the dreaded credit checks come into it and this may effect the final rate depending on your financial standing.

But what the compare web sites do is give you a list of banks that are quoting better deals straight from the off so you can start with the cheapest and work through them until you find a rate that suits your requirements.

Secured loans will always give the cheaper loan rates because the bank has some financial backing if the worst comes to the worst and you start to default on your payment. The security could be real estate or maybe a car or any other item that has real value. Unsecured loan applications are a big problem when chasing cheaper rates because you have nothing to secure against the loan so there is more risk involved. Where there is risk then this more often that not means a rise in the loan interest rate.