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What is a personal loan? and What is a good interest rate on a personal loan?

 


What is a  personal loan? With a personal loan, you borrow a fixed amount at a fixed interest rate that is paid over a  period of time. Usually unsecured (no mortgages like cars and homes) personal loans are used for debt consolidation, home renovation projects, and other large expenses that you don't want or can't afford to pay at once. I can do it. 

 personal loan interest rates by loan grade 

 The FICO credit score has a significant impact on an individual's lending rates. Some lenders have interest rates outside the range listed below, but these are exceptions to the rule. 

 Excellent: To have good credit and qualify for an interest rate of about 10% to 12%, you do not need to include the following derogatory statements in your credit report: B. Debt collection or bankruptcy. You also need to keep your balance as low as possible and pay all invoices on time. 

 good: With a good credit score of 690-719, you could get  a personal loan interest rate between 13.5% and 15.5%. If you have this credit rating, you may not be overdue for more than 90 days and almost all invoices may have been paid in time. 

 average: An average credit score of 630 to 689 means that your personal loan interest rate is likely to be 17.8% to 19.9%. If you are using more than 30% of the available credits and have one derogatory note in your credit report, or if you have a history of late payments,  you can get a score in this category. 

 bad: With a minimum credit score from 300 to 629, you may have trouble qualifying for a loan. The loans  you qualify have the highest personal loan rates in the range of 28.5% to 32.0%. If you recently filed for bankruptcy, have a lot of unpaid invoices, or have a few  credit card limits, your credit score will drop. 

 What is a good interest rate on a personal loan? Interest rates depend on loan terms  and the creditworthiness of the borrower. What counts as a "good" interest rate varies from person to person, depending on what you need  money for and the other options you have. If you are using a personal loan to consolidate your debt, the interest rate on the appropriate personal loan  is better than the interest rate on your credit card debt (or the total interest rate if you have multiple credit cards). Otherwise, you won't save money, so it doesn't make sense to use a loan for debt consolidation. The average interest rate on a credit card is about 15%. 

 The higher the interest rate on a personal loan, the longer it can be used and the more likely it is to fall into a debt cycle. Example: For  a  loan with a 5-year term of $ 10,000, the difference in total cost between the 10% interest rate  and the 25% interest rate for 5 years is $ 4,862.56. 

 For the best rates, it is advisable to compare quotes from multiple lenders. All lenders have different weighting of variables (for example, credit history, credit score, income), which helps to provide different options. You can apply online or call the lender to request a quote. However, please note that personal information must be disclosed in  these procedures. As a result of the credit check that comes with your application, your credit score may drop slightly temporarily.

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