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How to Find The Best Online Loans

date June 22, 2020 time 4 min read 948 views

The world of loans can be intimidating. There are many different companies vying for your business, all claiming the best loan rates. It can be a little tricky to differentiate between them and find a loan that works with your financial situation. But it isn’t as hard as it seems. Today we’ll go through some of the factors you should consider when looking for a personal loan online.

Get the right term

IDeally, you should look to pay off debt as quickly as possible. You don’t want to pay much more than the original sum borrowed. However, keeping your payments manageable is your top priority so plan your length accordingly.

The plus of a long-term loan is that the monthly repayment rate will be noticeably lower than its short-term equivalent. The downside is that you’ll have to pay off a much bigger sum overall. 

For example, let’s take a $30,000 loan based on a good credit score (690-719)(Source: For a 2-year loan, you’ll have to pay around $6,000 in interest but repayments will be around $1,500 per month. However, with a 4-year loan, you’ll be paying around $880 a month but the interest will be well over $12,000. You spend half the money every month but you pay a bit more.

When you’re looking for the best online loans, it’s even more important you watch the payment terms. If it’s a relatively new and unestablished company, you may need to be wary about long terms (greater than a year). What if the platform goes under before your term is finished? 

Watch those fees

You should always be on the lookout for a company with low fees on overpayment or early repayment. Your financial situation may change and allow you to pay your loan back more quickly. Many companies don’t want to lose all those extra months of interest and may charge you extra if you repay early. 

If your situation takes a turn for the worse, you want to be with a loan company that has fair penalties for late payments. Companies can punish borrowers harshly for missing payments. It’s a way of getting you on the hook for the long term – this is commonly known as the debt trap and it’s a place you never want to be in. 

Additionally, you may want the opportunity to restructure your loan if payments become unmanageable. Loan companies vary immensely with how they treat their customers. Some have business models based on plunging people into the debt trap while others can be more sympathetic. Research the company you’re thinking of borrowing from and make sure that they’re open to restructuring if your circumstances take a turn for the worse.

Find a low rate.

The first thing you should look for in a loan is a great interest rate. And by great, I mean low.

With unsecured personal loans, one of the most important factors for calculating your interest rate is your credit score. The higher your score, the less risky you are considered, and the lower the interest rate they’ll quote for you. Your annual income and zip code will also play a big part in creating your personal credit profile. 

At the moment, people who have the most desirable profiles (excellent credit score, high salary, and a swanky home address) can get a personal loan at around the 6% mark. However, for most people with excellent credit scores, you’ll be looking at roughly 13.9%.

Let’s take a look at the difference between having an excellent credit score (720-850) and having a bad one (629 or under). For this example, we’re looking at a 2-year loan of $20,000. Using the NerdWallet Personal Loan Calculator, with an excellent credit score you’ll pay back approximately $23,000 – $959 a month with an APR of 13.9%. With a bad score, your interest rate almost doubles to 27.2% APR. You’ll have to pay $1090 a month, and a total excess of $26,000.

As you can see, your credit score really affects your average loan rate. If you have a bad one, you should steer clear of lenders who use credit scores (or similar systems) to assess your rate. Find one that uses collateral instead.

Secure your loans with collateral

If you have a less-than-desirable credit score, you might find it difficult just to get your loan approved, let alone find one that’ll give you favorable terms. The alternative is a secured loan where you put up an asset, such as your car or house, as collateral.

Making borrowers put up a tangible asset as collateral lowers the risk for the loan company, as they have something that can be liquidated if you default. While it may sound a little scary offering your prized possessions for a loan, the benefit is you can often get a much better interest rate.

The loans that we provide, for example, are secured with cryptocurrency collateral. Crypto-backed loans allow borrowers to leverage their long-term crypto investment for cash. Check out our blog to get more information on how to borrow money against your crypto and other tips for getting the most out of online loans from MyConstant.

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Peter Upton

Peter Upton

Community Manager

Invite friends and you both earn 10 USDT when they first lend stablecoins or make a crypto-backed loan

Tags: loans online loans best online loans p2p lending peer to peer p2p borrow money low rate lending

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