Whether you’re trying to consolidate debt, pay medical bills, or finance an expensive investment, personal loans have multiple important uses. Regardless of your reason for getting one, it’s imperative to be informed about interest rates so that you can make wise decisions and keep your payments organized. Here’s what to know.

What Determines Personal Loan Interest Rates? 

1. Amount & Term 

The bigger your loan and the longer you agree to take to pay it back, the greater the risk the lender takes. They compensate for that by hiking up the interest rates. Get the lowest and shortest personal loan terms as possible to reduce the rates.

2. Employment & Education 

A lender is more likely to trust that you can make regular payments on your loan if you can prove that you have the type of employment and education that can demand a decent income. By verifying that you have at least 24 months of steady, gainful employment, an in-demand degree, and moderate to high wages, the lender may be more convinced to keep your interest rates low. 

3. Debt-to-Income Ratio 

Even with a high income, it’s possible that you already have debt. The amount of your monthly debts divided by your monthly income determines your debt-to-income ratio.

Note that credit lines and installment loans, like mortgages, aren’t usually counted, nor are utilities. Interest rates based on this ratio vary widely depending on the lender, but generally, lowers ratios lead to lower rates. 

4. Credit Score 

Your credit score is impacted by diverse factors. In turn, the score partially determines the interest rates of personal loans.

To ensure that your rates are as affordable as possible, keep the score up by making regular payments on credit lines and not taking out too many lines at once. 

To find out how low your personal loan interest rate can be, contact Coastal Finance Company in Savannah, GA. For over 15 years, they’ve offered individualized service with flexible terms and online applications. Their priority is helping you finance your needs as effortlessly as possible. For more details on loans, call (912) 303-9979 or message them online.