Cheapest Unsecured Loans: Borrow Money at a Low Interest Rate

Jun 23, 2010
Asa Ghaffar

: How to Get the Cheapest Unsecured Loans - gilbien03

The cheapest unsecured loan rate results in a lower cost of borrowing. Achieve a better credit report score & receive approval for a low interest rate loan.

It won't come as a huge surprise to discover that the cheapest unsecured loans are offered to those applicants who are in the best position to repay them. This type of low interest rate loan is provided without collateral so it can be extremely difficult for the lender to recover its money in the event of default. The lending criteria for low cost loans has been tightened in recent years, but building credit scores for a better credit report will increase the likelihood of approval. Not only that, a higher credit score will dramatically reduce the cost of borrowing money.

Where to Get the Cheapest Unsecured Loans

Low rate loan from a bank. By far the most popular way of borrowing money, especially for customers who have an established relationship with their lender. Some banks will have pre-approved offers.
Low interest rate loans from a peer-to-peer lender. People lend money to other people via an intermediary, such as Prosper.com, Zopa and Lending Club.
Cheap loan rate from a family member. Arrange to borrow money from a member of the family. A popular choice when unemployed or if bad credit is a potential issue.

Quick Ways to Repair Credit Ratings for a Cheap Loan Rate

Check the information that is held by credit reference agencies for mistakes and get any errors corrected. Lenders won't know that the information held isn't correct so the onus is heavily on the individual to resolve any issues prior to applying for a low cost loan.
Ensure that no more than 30% of the allocated credit limit for each credit or store card is used each month. Liz Pulliam-Weston, a leading financial expert for MSN Money, stated: "You typically can increase your scores by limiting your charges to 30% or less of a card's limit."
Don't close down credit and store cards, use them sparingly each month. Making a few purchases each month and settling the balance can help achieve a higher credit score and the cheapest unsecured loan rate. Closing down obsolete accounts will result in a credit score drop.
Avoid making too many applications for credit as each search will be visible to creditors for a period of 12-months. Use a comparison site, such as moneysupermarket.com, to pinpoint the best offers. Too many loan applications in a short timeframe can set of the alarm bells for lenders as it implies financial difficulties or potential fraud.
Use savings to pay down debt. Never borrow too much money as the higher the applicant's income-to-debt ratio, the more expensive the cost of borrowing money.

How to Borrow Money at a Cheap Loan Rate

All U.S. citizen are legally entitled to a totally free credit report once every 12 months under the Fair and Accurate Credit Transactions Act. In order to get approval for the cheapest unsecured loans, it is important to order a copy from each of the credit reference agencies, identify and correct errors and improve credit utilization in respect to revolving debt. Building credit scores can be achieved relatively quickly by making just a few of the simple adjustments outlined above. Only apply for credit when certain that the eligibility criteria for a low interest rate loan are complied with.

Sources

Pulliam-Weston, Liz. (March 18, 2010). "7 fast fixes for your credit scores." MSN Money.