How to Compare Loan Estimates
Personal loans are available from a wide variety of lenders, and depending on the lender you choose, your rates and terms can vary significantly.
That’s why it’s important to take the time to compare loan estimates and quotes from multiple lenders. Doing so is the only way to ensure that you’re able to find the best option for your needs.
Compare Loan Estimates in Less Than 60 Seconds
How to Compare Loan Estimates From Multiple Lenders
Often, people applying for personal loans are in need of quick cash and it can be tempting to move quickly through this process.
However, choosing the first lender you qualify for can lead to borrowing money with exceedingly high interest rates. This can lead to you spending an additional hundreds or even thousands of dollars over the course of your repayment term.
Fortunately, though, most lenders will allow you to get pre-approved. Pre-approval allows lenders to give you a quote without having to perform a hard credit pull.
By taking advantage of this, you can compare rates and terms from multiple lenders to find the best personal loan available.
What Interest Rates Should You Expect?
Every lender offers different rates and has its own method for evaluating creditworthiness.
That being said, your credit score will be the most important factor, and based on that, you should expect to see the following interest rates:
- Poor Credit (300-629): ~27 - 32% interest rate
- Fair Credit (630-689): ~18 - 22% interest rate
- Good Credit (690-719): ~14 - 18% interest rate
- Excellent Credit (720+): ~10 - 14% interest rate
These rates should serve as a good set of guidelines for you when shopping for and comparing lenders.
Other Factors to Consider
Aside from your interest rate, you should also be sure to compare factors such as:
- Secured vs. unsecured
- Flexible repayment options
- Fees (e.g. origination, prepayment, late payment, and other fees)
- Borrowing limits
- Eligibility requirements
- And more
While your interest rate may be the biggest factor, it’s very important to consider the entire loan offer when comparing lenders.
Where to Get a Personal Loan
You should also be familiar with all of your options when shopping for lenders to ensure you don’t miss out on potentially great offers.
Personal loans are available from:
- Banks: Traditional banks can offer very competitive rates but may have strict eligibility requirements.
- Online Lenders: Online lenders are very popular as they often have lenient requirements, competitive rates, and are widely available.
- Credit Unions: Local credit unions can be a great option for qualifying members as they tend to offer low rates, flexible repayment plans, and lenient requirements.