A person who wants to take a loan, always looks for one which is cheap, meaning a loan which carries a low rate of interest. The loan may be a car loan, a home loan or even a personal loan.
The borrower may be able to get cheap loan interest rates due to any of the following reasons:
From the macro perspective, the central bank of the country may be following a low rate policy depending on the state of the economy. Lenders base their rates on these rates.
Sector Specific Situation
A particular sector may not be doing well and loans related to that sector may be therefore available at low interest rates. For instance, when the demand for cars is low, car manufacturers arrange for loans below market rates to encourage borrowing and increase sales.
A particular lender may be offering cheap loan interest rates. However, he may have included some hidden costs like loan processing fees which would make up for the low interest. The borrower may not realize this and select this loan just because he would have to pay less interest.
There may be stiff competition among lenders who try to outdo each other by offering cheap loans.
Secured vs. Unsecured Loans
Unsecured loans generally carry a high rate of interest as the risk to the lender is quite high. Those who cannot afford to pay high interest can opt for low interest secured loans where they offer some asset such as a car or home as security. These are low risk loans as in the event of default, the lender can recover his dues by taking possession of the secured asset and selling it.
How to Find Cheap Loan Interest Rates?
Cheap loans can be found in a simple manner by just searching for them online. One can find all about cheap loan interest rates by visiting lending websites which along with other information also contain tables showing comparisons between different loans. On the basis of this information, one can select the cheapest loan.