At some point, people need to fill a void in their budget by taking a loan. Whether you need money to meet an unexpected medical expense or looking forward to making a big purchase, loans can cover you. It would be much easier for you when you’ll do some research on your own (read the finance company reviews) and know which company is better for you to go for. Besides the good companies out there, you can fall prey to fraudulent companies or those companies that have a terrible reputation in the financial market. To help you in filtering out companies with a bad reputation, a reviewing platform is the best option to consider.
Reading the reviews can help you in avoiding unexpected situations. If you have a small business for which you want to raise some capital to cover the expenses, then taking out a loan is the best option for you too. But taking a loan from the financial companies with the highest interest rates can get you in trouble in the future.
What factors affect the personal loan interest rates?
Interest rates fluctuate based on several factors;
- Income: Your income is the most important factor in deciding whether you qualify for a personal loan or not. The bank must evaluate how easily you will be able to repay the loan. The bank must investigate to believe in its customers to offer them a personal loan.
- Credit score: The most essential aspect in calculating your loan rate is your reliability, as indicated by your credit score. The categories of borrowers that these lenders target accounts for a large part of the diversity between them.
- The time period of loan: The time period affects the interest rates you’re going to apply for. If you’re going for short-term loans then you’ll have lower interest rates than those of long-term loans.
- The amount borrowed: It is also important to consider the amount of personal loan you demand. There’s a simple reason for this: the more money you want, the greater the risk the lender assumes by granting it.
Every lender has its lending procedure, and apparently, little variations in borrower scoring methods can result in significant variations in loan rates and conditions.
What if APR is around 30%?
APR stands for Annual percentage rate which defines the yearly cost of loans in terms of percentage. 30% APR is higher for all types of loans as it is what most borrowers are expected to pay yearly. Good APR is 15% or less.
Companies with the highest interest rates
These are the companies with the highest interest rates that you should avoid;
- Gibsland Bank & Trust company (36% APR)
- Conway national bank (36% APR)
- Mountain Valley bank (31% APR)
- Davis trust company (31% APR)
- Ouachita Independent bank (30% APR)
Understanding what criteria lenders look at when analyzing loan applications will help you improve your chances of being accepted. When considering taking a loan make sure that you have a good credit score, strong income, acceptable employment history, and a good debt-to-income ratio.