Loans can be expensive and hard to get in this economy. At least, that is what the media tells us. But if you shop around, there are plenty of deals out there. All you have to do is shop around, and make sure that you learn about your lender and the loan before you sign anything.
For those lucky enough to qualify, loans have never been cheaper. The rate that banks lend to each other at, the Federal Open Market Funds rate hovers between 0 and 0.25 percent, the lowest in decades. One year LIBOR, the basis for many loans, stands at 0.81 percent. You will likely pay more, but home equity loans, personal loans and even car loans have never been cheaper.
At the same time, banks are often afraid to lend, especially larger banks that received federal TARP money. Many banks will throw out anyone with a FICO score less than 800. This is especially ironic considering that many banks lent far too liberally during the boom years.
Thankfully, consumers have options if they shop around for loans. One option to obtain cheap loans is through smaller banks or credit unions. Smaller banks and credit unions often need to move assets on their books, and may make loans to someone with lower credit scores. Check with these institutions to see if they are interested in lending.
Another option are online loans. These lenders are based anywhere the dollar is used, so you have a broad marketplace of lenders. You may be able to find cheap online loans from another bank, authorized loan dealer or online loan center.
Bear in mind that not all online loans are the same, particularly those that offer cheap loans online. While many are reputable dealers, a few are unscrupulous. Before you sign onto a loan, be sure you read the fine print to see how they calculate interest, if they compound interest, and how they can provide customer service.
Taking out a loan does not have to be scary. By reviewing what type of lender you want, and educating yourself, you can find the best lender for you with the lowest fees. The trick is to shop around, and see what you find.