Simply put, Cheap personal loans are multipurpose credit advances availed to an individual at highly attractive interest rates. And, they are referred to as multipurpose loans because they can be used to address virtually any cash need. But, who has the best rates for personal loans in the US in 2020? We will highlight a few in the table below, and explain everything you need to know about cheap personal loans in this guide.
Cheaper personal loans are unsecured loans that are availed to individuals at relatively low interest rates and highly attractive loan terms. Keep in mind that you often have to look beyond the interest rates when evaluating different personal loan offers. Most importantly, consider the loan APR – the annual percentage rate of a loan – indicating the total loan cost.
The difference between the interest rate and loan APR is, while the interest rate tells you the premium charged on the loan amount, the APR addresses the loan’s total cost. It takes into account the upfront and recurring loan fees, including the interest rates, the origination fees, the loan processing fees, and closing fees.
Therefore, the cheapest personal loans don’t necessarily refer to credit advances with low-interest rates. Rather, they refer to a credit advance with attractively low APR.
The qualification requirements for personal loans vary from one lender to another. There are, nevertheless, two basic requirements that every lender must take into account:
After satisfying these basics, the lenders will demand that you fulfill such other requirements as having a stellar borrowing history if you are to qualify for the cheapest personal loans. Other requirements include:
A combination of all these factors plays a key role in determining how low a lender can go when it comes to loan interest rates. Note also that different borrowers place greater significance on different requirements. For instance, while some consider a good credit score as the most important factor in determining the interest rate, others consider the stability of your income source. You, therefore, don’t have to worry about getting cheaper personal loans when you don’t have any borrowing history.
The national average rate for an unsecured personal loan in the US today stands at 10.3% and 28.5% for individuals with ‘perfect’ and ‘poor/average’ credit scores respectively. The best rate for a personal loan should, therefore, be any offer below this rate.
Note that the best rate in this context refers to the total loan cost, including any upfront payments or deductions from the loan like origination and closing fees.
The best rate on a personal loan today should also be void of exorbitant fines in case of missed or late payments and the unreasonable penalties for early payoffs.
The minimum average interest for personal loans currently stands at 10.3% for persons with credit scores above 720, 13.5% for borrowers with a credit score of 690, 17.8% for individuals with credit scores of 630, and 28.5% for anyone with a poor credit score – below 629.
Most traditional banks take between 2 to 10 days to approve and disburse a loan, while most online banks will process and disburse the loan on the same day or the next.
Most lenders allow you to borrow from as little as $1,000 to as much as $100,000.
The loan repayment terms vary from one lender to another but often range from 12 months to 12 years.
The answer is yes. It is entirely up to you to decide what to do with the sum of money you borrowed. Still, you have to remember that lenders ask what your loan’s purpose is in your application as it is one of their criteria for determining their risk in lending you money.