Personal Loan Interest Rates Are Rising for These Types of Loans

Share This Post

Credello: Thanks to the Federal Reserve's raising interest rates, many loan borrowers are getting sticker shock looking at their loan terms. But which loans are getting the highest rate increases? Here's what you should know.

The loans with the highest interest rates

Borrowers are seeing the biggest interest rate spikes on short-term loans, particularly those that run for three to five years. A report by Credible found that rates in April 2023 on 3-year, fixed-rate loans increased by 10.63%, while 5-year, fixed-rate loans averaged an increase of 9.41%.

What's most interesting is that it seems credit scores weren't a significant factor in determining rates. Credible found that these rate increases were happening for borrowers with credit scores of 720 or more, a score that's traditionally seen as worthy of the most competitive (i.e., lowest) rates possible.

Why are these loans getting such drastic rate increases?

Three- to five-year loans are typically categorized as "short-term" personal loans. There are a few differences between long-term and short-term loans, but the most significant difference is the interest rate attached. 

Short-term loans usually have more aggressive terms and conditions because the lender makes less money on them over time than on a longer loan, like a mortgage. The risks of short-term personal loans are also a factor lenders consider, as these loans are easier to get for those with lower credit scores. 

How to get the best interest rate possible on your personal loan 

Getting the best interest rate on your personal loan is important to ensure you are paying the lowest amount of money over the life of the loan.

Improve your credit score.

Improving your credit score is the simplest way to ensure you get the most competitive interest rates possible. While interest rates have risen dramatically for all credit scores, the better scores will always have more options available and the best rates possible. The reason for this is, again, due to risk. Generally speaking, lenders will see those with lower scores (~625 or lower) as less responsible with their finances than someone with a higher score. Some lenders have realized this could be an unfair practice, particularly to minorities or those previously underserved by banks, and have begun adding new criteria to their decision-making algorithms. However, for the most part, improving your credit score is the easiest way to get a better offer.

Credit scores are a mix of factors weighted based on their importance determined by credit reporting bureaus. The two most significant factors are the number of late payments on your record and the amount of credit you have available (known as the "Credit Utilization Ratio").

To increase your credit score quickly, focus on these two factors. Try to make the minimum payment on time every month on any outstanding credit card balances or loans. Next, try to get your credit card balances below 20% of your available credit. Focusing your effort on these two factors will cause the fastest changes to your score.

Shop around for the best rates.

If you're not seeing rates you like, shop around! Many lenders will offer promotional rates for both new and returning customers, so start with the lenders you already have an established relationship with, as they'll typically be the ones to approve your application the fastest.

However, if they're not willing to give you the terms you want, check out loan comparison sites with the most up-to-date information with interest rates lenders offer to those with similar credit scores. They'll also typically have reviews from other borrowers and ratings that give you insight into your chances of getting approved and details on what your experience could be working with them.

The bottom line

While interest rates on personal loans have slowly been creeping up for the past few years, there's been a drastic spike in rates caused by the Federal Reserve's interest rate hikes to combat inflation. However, that doesn't mean there aren't great personal loan rates out there still for those with good credit scores. By improving your credit score and shopping around for the most competitive interest rates available, you should get the best possible terms for your loan.

About Credello

Credello is a financial tech company offering a personal finance tool that simplifies financial decisions through personalized, on-demand recommendations — so users can borrow, save, or invest with confidence. Credello believes that finding the right financial product should be as easy and interactive as online shopping, and we are on a mission to make that possible. For more information, please visit https://www.credello.com

Contact Information:
Keyonda Goosby
Public Relations Specialist
press@credello.com
(201) 633-2125


Original Source: Personal Loan Interest Rates Are Rising for These Types of Loans

Related Posts

Pursuit Church Announces ‘United for Israel’ Rally at the University of Washington

Pursuit NW Stands United for Israel

Pursuit Church Announces ‘United for Israel’ Rally at the University of Washington
Pro-Israel March

Interfaith Rally

The Pursuit NW, under the leadership of Pastor Russell Johnson, is proud to announce its continued commitment to advocating for Israel with the upcoming "United for Israel" rally at the University of Washington on Sunday, May 12th, 2024, at 4:30 p.m. The rally will start at Red Square, with a march through the campus and will conclude at the Pursuit Seattle campus located on UW’s frat row.

Pastor Russell spearheaded the impactful University of Washington march, which convened shortly after the October 7th attacks on Israel. The Seattle event, in collaboration with StandWithUs and Oregon for Israel, featured distinguished guest speaker Mosab Hassan Yousef, renowned for his courageous stance as the "Son of Hamas."

He went on to direct the recent Pro-Israel rallies at Columbia University and the University of Southern California in collaboration with Sean Feucht, Let Us Worship, Hold the Line, StandWithUs, and various Jewish and Christian groups. The resoundingly successful events drew thousands of attendees representing various faiths. Since the events, the organization has been inundated with requests for similar initiatives to counter the alarming rise of antisemitism on college campuses across America.

Pastor Russell brings a wealth of experience and passion to Pro-Israel initiatives and is excited to return to his home base in Seattle, where the initiative first came to fruition. The Pursuit aims to provide a platform for the majority voice in America amidst media portrayals influenced by minority extremist perspectives. Pastor Johnson emphasizes the rally's focus on essential issues, including Israel's right to self-defense, the immediate release of all remaining hostages, and the restoration of lasting peace in the region.

About:

The Pursuit, based in Washington state, is a non-denominational church across multiple campuses, including Seattle, Kirkland, Snohomish, and an online presence. The church’s mission centers on glorifying Jesus and bringing people into an encounter with the presence of God. It’s no coincidence that their Seattle Campus is on the University of Washington’s Frat Row.

Contact: 

Pursuit NW Church | 9051 132nd Ave NE, Kirkland, WA. 98033

Emma LaMarche | emma.l@thepursuitnw.com

Media Intake Coordinator | 425-205-7428 | www.thepursuitnw.com

Contact Information:
Emma LaMarche
Media Intake Coordinator
emma.l@thepursuitnw.com
425-205-7428


Original Source: Pursuit Church Announces 'United for Israel' Rally at the University of Washington

Flock Together to Banff Sunshine for the 94th Annual Slush Cup

Banff Sunshine Village Slush Cup BANFF, Alberta, May 8, 2024 (Newswire.com) - An iconic Canadian Rockies tradition continues with the 94th final splas...

High Morbidity and Mortality But is Not Routinely Tracked

Hospital-acquired sepsis has very high...

Open Education Offers Powerful & Strategic Solutions in Response to Corporate Challenges Identified by SHRM

HR professionals focusing on maintaining employee engagement and retaining top talent in 2024 MIAMI, May 8, 2024 (Newswir...
green agriculture project
- Part of VUGA Media group -best seo company