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Go with a bank with whom you already have a relationship. If you have a checking or savings account or other credit accounts with this institution, they already know you and understand your credit history, spending habits, and income sources. Your excellent credit and your previous relationship with the bank may qualify you for a low-interest rate. Don't hesitate to shop around with other banks in order to find the best interest rate. Call the bank and ask a loan representative what credit scores the bank requires to get the best rates. Online lenders tend to cater to low-credit borrowers. Also, since their operating costs are lower than a brick and mortar financial institution, they may offer you better interest rates. Online lending marketplaces are also called peer to peer lenders (P2PL). Examples are Lending Club and Prosper. The interest rate they offer will still be based on your credit score. Again, the higher your credit score, the lower your interest rate will be. If you have lower credit, don't be tempted by lenders who guarantee you a loan despite your credit score. Only consider reputable, state-licensed financial institutions with no history of lawsuits. Also, view their ratings with the Better Business Bureau. Avoid payday loans at all costs. They are designed to keep you in an unending cycle of debt. Don't fall for advanced fee loan scams. These are lenders that ask you for an insurance fee up front before sending your loan money. This is known as rate shopping. It means applying for a number of loans in order to find the best rate. If you apply for several similar loans at the same time, the credit industry recognizes that you are rate shopping and batches all of the loan applications together. This means that your credit score won't suffer from applying for too many loans.
Apply for a loan from a major bank or credit union if you have great credit. Apply with an online lender if you have a lower credit score. Protect yourself from disreputable lenders. Shop around for the best interest rates.