People take loans for various reasons –to buy a house, a car, to tide over some difficulty, to fund their education and so on. The loan may be secured by an asset of the borrower or may be unsecured. It may be a short term loan of around 2 to 3 years or a long term loan of 20 to 25 years. Irrespective of the kind of loan and the term of the loan, every person who wants to borrow money would want cheap loan rates.
There are various ways by which one can ensure that he gets a loan with a low rate of interest.
If you are looking for cheap loan rates, you can approach banks where you already have deposits or lenders from whom you have borrowed in the past. Since they have dealt with you and know your background, they may offer loans at lower rates.
The internet provides a wealth of information. There are many web sites which are linked to different kinds of lenders including banks and which display tables comparing loan terms. Those looking for cheap loan rates, can visit these sites to find a loan with the lowest rate. However, one should also verify with the lender whether he would be charged any additional fees like loan processing charges and whether he would have to pay a penalty if he prepaid the loan. These additional charges would push up the cost of the loan and the advantage of a lower interest rate would be lost.
A secured loan carries a lower rate of interest than an unsecured loan. This is because the security provided by the borrower lowers the lender’s risk.
If you are looking for cheap loan rates, you should know that a loan applicant with an excellent credit score may be charged a lower interest rate by the lender because the chances of default are low, reducing risk of loss.