Getting the best personal loan rates is similar to getting good rates on many other types of loans, such as a credit card, home loan, or auto loan. To get good loan rates, it is necessary to have a good credit score and a good credit history. Sometimes, however, it can be a bit more difficult to get a good rate on a personal loan, simply because this is often unsecured debt.
Unsecured debt is debt that does not have any sort of collateral associated with it. Collateral might be a car, a home, or a boat, for example. These are items of worth, that can be repossessed if you fail to make payments. A credit card is an example of unsecured debt. Most personal loans are also unsecured, but there are exceptions; in fact, one way to get better loan rates is to secure the loan with collateral.
Before even applying for a personal loan, it is important to check your credit score and credit history. Though your credit report can generally be obtained for free once per year, you will need to pay a small fee to receive your actual credit score. If there are any errors on your credit report, you can begin to take steps to correct them. Paying down any balances on credit cards will also improve your credit rating. A high credit score and credit history, together with on-time bill payments, will make it much more likely that you will be approved for a personal loan, and will be given good personal loan rates.
Once you've checked your credit reports, you can begin looking for personal loans. It is important to shop around for the best personal loan rates - many banks offer deals, and you can often get much better rates by just comparing banks. If you have been with a bank for a long period of time, however, the bank might be willing to work with you to secure a good personal loan rate.
Another option to get a better rate is to have someone cosign the loan with you. If your credit scores or credit history are poor, a cosigner with a better credit history might be a requirement. This can help improve personal loan rates. However, keep in mind that the person cosigning on a loan for you is equally responsible to make payments, if you fail to do so. This is a big personal responsibility, so be sure not to let your cosigner down.