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Pick a Low Interest, Low Fee Personal Loan

A personal loan can come in handy to meet unexpected expenses, make a big purchase such as major appliances or furniture, or to fund a vacation or wedding. Typically, these are unsecured loans, meaning you do not put up collateral such as your house. Lenders tend to charge a higher interest rate and add-on fees on unsecured loans, so it's up to you to find a loan with a fair interest rate and low fees.

Get Your Credit Score

The higher your credit score, the lower the interest rate you can qualify for. Check your credit score prior to applying for a personal loan. Each year, you can get a free credit report from the three major credit reporting agencies. Legal publisher Nolo Press offers advice on getting your free credit report. Knowing your credit score prepares you for approaching lenders, as you can research fair consumer loan rates for your score and income. You will also have the opportunity to correct any errors in your credit report, such as inaccuracies in your credit history.

Lenders look at your credit score, credit history, current debt and income to determine your worthiness for a loan.

Pick a Low Interest, Low Fee Personal Loan

Due Diligence: Looking at Lenders

With a good credit score, the place to begin your search is your current bank or credit union. Peer-to-peer lenders are also a good source for personal loans. Payday lenders are best avoided, with high fees, interest rates and penalties.

Credit unions, in particular, are worth a look. As non-profit institutions, they are able to offer lower rates than commercial banks. Some credit unions cater to particular groups or communities, including low-income people, such as the Oregon Urban Rural Federal Credit Union.

Peer-to-peer lenders charge slightly higher rates than credit unions, but you may quality for a loan easier with them. Prosper is a peer-to-peer lender that offers decent interest rates, while Lending Club is another that offers low fees. Personalloans.com offers loans to those with less than excellent credit, generating peer-to-peer loans as well as bank loans via a simple application process.

Check the fees with each lender you consider, such as loan generation fees, late payment fees, and pre-payment penalty fees.

Lock In Low Rates

Compare banks, credit unions and peer-to-peer lender rates. Take a look at credit cards that offer 0% introductory rates. You need good credit to qualify for credit cards, and check on the interest rate at the end of the introductory period.

Look for a family member or friend with good credit to be your co-signer to get a good interest rate. Be sure that there is mutual trust, and that you have a plan to make the payments without fail.

Before you apply for a personal loan, ask yourself if you really need it. Have you considered saving, or borrowing from a relative or close friend? Would it be easier to apply for a low or no interest credit card? Thoroughly investigate potential lenders prior to applying. Check the MoneySavingPro Best Personal Loan Ratings.

Avoid unscrupulous lenders who pile on the fees and high interest rates. Know exactly what to expect from each lender in fees and interest rates. Finally, take a cold, hard look at your income and expenses. Can you budget for the monthly payment on a personal loan? If the answer is yes, you are ready to apply.

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