If you’re looking for a personal loan, there are many places you can go. The key is to take your time and compare your offers, so you can find the best rate with the lowest fees.
Where to look for a personal loan
- Online sites. Websites like www.LendingTree.com allow you to fill out one form and receive up to four personal loan offers. You can then compare rates and fees and decide which one has the best product for you.
- Credit unions. Usually credit unions offer personal loans at interest rates that are a couple of percentage points below other lenders.
- Banks. Although it is possible to get a personal loan from a bank, many prefer for you to get a credit card simply because that creates a long-term relationship between you and the bank.
A personal loan can have certain advantages. If you do not own a home or do not have much in home equity, a personal loan may be your best choice. If you get a personal loan that has a fixed rate and term, it forces you to be disciplined and pay the loan off within that timeframe, unlike a credit card which tempts you to continue spending. Also, the interest rate on a personal loan is usually lower than that of a credit card (although the credit card’s initial teaser rate may be lower).
When considering a personal loan, be sure to weigh the disadvantages. For example, the interest payments are not tax deductible while the interest on a loan secured with property usually is. Also, rates can easily be higher than 10 percent on a personal loan. Mortgage and home equity loan rates are much lower than that. That means you will end up paying far more interest on a personal loan than you would on a home equity loan for the same amount.
All that being said, sometimes there is no way around needing a personal loan. If you decide to get one, remember that the rate you get will not be as good as it would be with a secured loan. This makes it is especially important to compare as many offers as possible so you get the best rate available to you and also pay as little in fees as possible.