Looking for Low Interest Personal Loans with Bad Credit
Looking for low interest personal loans with bad credit? The unfortunate truth is that having bad credit makes it harder to get approved for loans… period. So, if you’re in need of a loan, expect to pay a higher interest rate than persons with good or stellar credit ratings are going to pay. That’s just the nature of getting a personal loan with bad credit.
When it comes to getting low interest personal loans with bad credit, it isn’t impossible for most borrowers. Getting the best possible interest rate and getting the best available deal on your loan is going to take something extra special—patience.
The Shortlist
Do your research. Look for lenders who specialize in loans for people with bad credit as well as more traditional lenders including banks and various credible online lenders. If a lender looks like an ideal match for you, get them on your shortlist and leave lots of space to the right of them (you’ll be needing it later).
Once you’ve got anywhere between 4-7 lenders on your shortlist it’s time to drill down.
Look at each lender. See if they provide you a range of interest rates available to borrowers with poor or bad credit. Write down both the highest and lowest rates within range.
Next, carefully read through every lender’s terms and conditions. Keep your eyes open for prepayment penalties or a TAR “total amount repayable” penalty since some lenders will charge you with a penalty in the event you pay off your loan early. Others will not.
Other common costs include origination fees which are upfront fees charged by lenders prior to processing a new loan application and generally range between .5 and 1%.
Once you’ve taken down all the fees and various costs you would incur with every lender on your list, you’re ready to crack the numbers but don’t fret! With the array of various online calculators available today, getting those figures sorted is just a few clicks away.
Math Matters
Now that you’ve got your range of interest rates, origination fees, prepayment penalty fees and any other costs laid out for every lender, you’re ready to plug in the numbers.
For loans with a range of interest rates listed, calculate the lowest APR and the highest and write down both. This handy loan calculator will help you. The “total paid” figure you arrive at should show the total amount you will pay in loan repayment plus interest. Write that figure down. With a regular calculator, multiply the loan amount (not including the APR) by the origination fee of .5-1% if applicable. And if there’s a prepayment penalty, add that too.
Once you’ve got a dollar amount for all the various costs, you can add straight across. Ex: Loan amount + amount of dollars you will pay in interest + origination fees + prepayment fees + any other misc fees and costs.
Once you do the math, you can determine what you’ll end up spending over the life of each prospective loan.
The Road Ahead
Prior to signing, make sure that the monthly repayment amount is something you can afford. Be realistic about how much you can afford to pay back in monthly payments even if you’re hit with an unforeseen expense. Don’t opt for paying a larger monthly loan payment if you’re unsure you’ll be able to pay it, without fail, every single month.
When it comes to shopping for low interest personal loans with bad credit, remember the old adage goes, “It’s not how we make mistakes, but how we correct them that defines us.” The same principle applies to your credit and financial wellness overall. However you may have faltered in the past, the present is full of opportunities to improve. So, if you find that you’ve had to settle for a loan with a higher interest rate than you would have liked, use that as motivation to put a concerted, effective plan into place to improve your credit. You’ll be glad you did.
