Taking control of your finances can be daunting, but a low-interest personal loan might just be the lifeline you need.
Whether you’re planning a big purchase, consolidating debt, or simply navigating unexpected expenses, understanding your loan options can empower you to make smart financial choices.
Dive into our guide to discover how low-interest personal loans work and how they can benefit you in reaching your financial goals with ease.
Understanding Low-Interest Personal Loans
A low-interest personal loan provides borrowers with an interest rate lower than other loan types, reducing your interest expenses over the loan’s duration. This ultimately saves you money.
Banks, credit unions, and online lenders typically offer low-interest loans, but it’s a good idea to compare different lenders since rates can vary.
Here’s a brief breakdown of some of the different types of lenders.
Banks: Many people turn to banks for personal loans, but they can be pricier, with higher initial interest rates than some low-cost alternatives. Banks often have strict lending criteria, which can make it difficult to secure a loan if you have poor credit. On the other hand, finance companies and online lenders may have more flexibility, sometimes lending to individuals with less-than-stellar credit. You won’t be able to get a fast low-interest personal loan from a bank since they often take longer to approve.
Credit Unions: Credit unions provide another option for low-interest personal loans. As non-profit financial organisations, they often offer lower rates to their members.
Online Lenders: Online lenders are increasingly popular for obtaining low-interest personal loans. They often have efficient application processes and offer competitive rates due to reduced overhead costs. It’s crucial to research and read reviews to ensure the lender is reputable and reliable. Many online lenders offer same-day loans, like us.
Comparing Online Lenders to Banks for Personal Loans
Borrowing from online lenders has advantages like lower costs and increased flexibility, while banks might be more expensive. For instance, personal loan interest rates at New Zealand’s major banks—BNZ, ANZ, ASB, and Westpac—start between 13.90% and 13.95%, whereas East Bay Finance offers a starting rate of just 9.95%.
Online lenders often tailor interest rates to individual circumstances, unlike banks, which typically offer the same rates to everyone. If you have a strong credit score and disposable income, you might actually pay more with a bank.
Additionally, online lenders like East Bay Finance can provide higher borrowing limits. While banks usually offer up to $30,000 for unsecured loans, East Bay Finance can lend up to $75,000 and more with security. An amount like this can make a significant difference in projects like renovations, car purchases, or loan consolidation.
Get a lower interest rate with a secured loan
When comparing unsecured personal loans with secured ones, the main difference is the presence of collateral.
With secured loans, you back up your loan with an asset like a car or property, which eases the lender’s mind and often means lower interest rates for you.
On the other hand, unsecured loans don’t require any assets, making them a bit riskier for lenders. As a result, they usually have higher interest rates.
While unsecured loans give you the flexibility of not having to pledge your assets, a secured loan can be a savvy choice if you have valuable collateral, typically offering better-borrowing terms.
With a secured loan, you can also borrow more – up to $150,000 – or even more in some cases.
Why your credit score matters
If you have a good credit score, you’re more likely to get a lower interest rate. Credit scores range from 0 to 1000, with higher scores showing better credit health.
A higher credit score makes you a lower risk to lenders, meaning you’re more likely to receive a better interest rate. So, it’s worth taking steps to improve your credit score before you apply for a personal loan.
How to improve your credit score
Boosting your credit score involves understanding what affects it and making some changes to your financial habits. Things like missed payments, loan defaults, your credit history’s age, and frequent loan applications can bring down your score.
To boost your credit score, try focusing on paying off or consolidating loans to manage your debt more effectively. Make sure to pay on time to keep your score healthy, and think about cancelling extra credit cards.
Give your spending a makeover by creating a budget to spot and trim unnecessary expenses. Starting an emergency fund can help you handle unexpected costs without relying on credit. Debt consolidation loans, like those from East Bay Finance, can make managing your finances easier and lower your repayments.
Why Opt for a Loan Broker?
At East Bay Finance, we act as your loan broker, meaning we connect with a variety of lenders to increase your chances of getting an approval. We can also help you get a better deal.
Another great thing about this is that you only need to fill out one loan application, yet it reaches multiple lenders. Applying to multiple lenders to check your options would require you to provide the same information and answer the same questions again and again. With us, you only do it once
Let East Bay Finance handle the legwork for you. We manage the tricky bits, and you can simply pick the best offer. Soon enough, you’ll have the funds you need with terms that work for you.
Reach out to the East Bay Finance team today for a complimentary and friendly chat about how we can support your financial aspirations.
