How did you get that interest rate?

It’s one of the most important aspects of a loan for any borrower: the interest rate. It determines how much money you’ll be paying the lender in the first place, and it may mean you’ll pay a lot more or a lot less than you originally planned.

There are several factors that can affect the interest rate you’ll be charged. Here are three things to look at before signing or applying for a loan.

Your credit history

If you have a well-structured credit history, with little to no delinquent accounts in your name, you’re likely to get a low interest rate, which is typically below 5 percent. Now, if your credit history is poor, the chances you’ll be approved for a loan are very, very low. And if you are approved, chances are your interest rate will be very high, more than likely in the double-digit range (10 percent or greater).

Your income

If you pull in a high income, and can prove it, then you may be able to obtain a low interest rate on a loan. The opposite applies to someone with a low income or an inability to prove their income. The lack of proof or cash means the lender will more than likely want a high interest rate to command because the loan presents more risk to the lender.

Reputation of the lender

Is this lender a financial institution or a convenience lender (think of a payday lender)? Applying for the right loan at the right financial institution will ensure you don’t ripped off down the line. Payday lenders have been known to charge far beyond the 100 percent interest, according to the Center for Responsible Lending.

For more information on the bad reputation of payday loans, visit the Center for Responsible Lending’s website.

Learn more, crunch the numbers or apply today!

Credit Card Real Estate Vehicle Loan Check Rates