Best Way to Compare Personal Loans in Ireland

Are you looking to take out a personal loan? Personal loans in Ireland require some formalities. One of them is that you should have a decent credit score. No lender would approbate your loan application without perusal of your credit report. If they find that your credit rating is not so impressive, they will charge either high interest rates or repudiate your application.

Regardless of your credit rating, interest rates vary by lender. If you want to save money on interest payments, you should carefully compare personal loans. There are various comparison websites that will allow you to know the interest rates offered by different lenders.

However, it is worth noting that these websites only disclose interest rates and not fees and associated charges. The representative examples cannot be so helpful in order to decide which lender you should choose to take out a personal loan. Actual interest rates will be higher than those displayed on comparison websites because they include fees and related charges.

Comparison websites cannot give you a true estimate

First off, you need to keep in mind that comparison websites do not disclose true information about interest rates. One of the reasons for this is that they do not include fees, but even if fees and other charges are displayed, actual interest rates will be higher than the estimated ones. This is because they are charged by taking into account your overall credit profile.

No lender can give an exact quote without running an affordability check. Every borrower’s financial condition varies, and therefore, different interest rates will be charged to them. Those with a subprime credit report will be charged higher interest rates, and those with a decent credit report but with lower income will also be charged high interest rates.

Rates you see on comparison websites are just a representative example. When you formally put in a loan application, your chances of getting a high interest rate are quite high because your overall credit profile will decide it. In addition, actual rates include fees and other charges. They are called annual percentage rates (APR).

The best way to compare interest rates is to obtain a preapproval letter

It is always suggested that you compare interest rates before applying to a lender. The best way to establish a comparison is to receive a preapproval letter from different lenders. The good thing about this is that you will come to know the estimated interest rates without losing your credit score. Lenders will make a preapproval decision based on your income sources.

After receiving prequalifying letters from multiple lenders, you can easily choose a lender who lends money at lower interest rates. But this is to remember that actual interest rates will vary from those quoted in the preapproval letter. They are usually higher because a lender will go through your credit report and income sources.

Of course, if your credit rating is not stellar, you will be refused a lower interest rate. Lenders generally assess the default risk. If they perceive you as a risky borrower, they will certainly charge you high interest rates.

By obtaining prequalifying letters from lenders, you will be able to pick which lender is offering you an affordable deal that suits your budget.

Ways to get the best personal loan rates

Of course, you would have to compare interest rates between direct lenders. While comparison websites might come in handy, you should try to receive a prequalifying letter from multiple lenders. This does not leave hard inquiries on your credit report, and hence, you do not have to bear the risk of losing your assets. But that is not the only way to get the best personal loan rates in Ireland. Here is how you can consider applying for personal loan rates in Ireland:

Keep your credit report decent

It is not surprising that you will need a good credit report in order to qualify for lower interest rates. When your credit rating is not abysmal, your lender will charge lower interest rates. They will also be able to lend you a large amount of money. The biggest benefit of having an up-to-scratch credit file is that you can qualify for a personal loan with fewer conditions and restrictions.

Focus on your debt-to-income ratio

A debt-to-income ratio will not directly affect your credit score, but you will notice an indirect impact on your borrowing ability. A high debt-to-income ratio will increase your default risk. Lenders will not be able to trust your repayment capacity. As a result, they will either reject your application or restrict the loan amount.

A debt-to-income ratio should ideally not be more than 30%. Experts suggest that you should keep it lower than that. An ideal ratio is 25%. The lower the better. A high debt-to-income ratio suggests that you count on loans every time you come across a financial emergency.

Pay off your dues before applying for a personal loan. You should not owe any outstanding debt at the time of applying for a personal loan.

Keep your credit utilisation ratio low

A credit utilisation ratio should be as low as possible. It is always suggested that you never keep more than 25% of your credit card balance. However, make sure that you clear your dues before your credit card company informs credit reference agencies of your balance. This will protect your credit score from going down.

The final word

Getting the best personal loan in Ireland can be challenging because affordable interest rates depend on multiple factors. While comparison websites can come in handy, the most ideal way to obtain the best interest rates is to get prequalification letters from multiple lenders.

Since actual interest rates will always be higher than the estimated rates, you should always ensure that your budget has wiggle room to make extra payments. Use online loan calculators in order to see how much it would cost you. Budget for extra money as actual rates would be high.

Do not forget to keep your credit score in good condition. This is the most important factor that lenders use to decide on interest rates.