Comparative purchases for personal loans can save consumers 35 percent interest

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The LendingTree study found that suitable borrowers were average. can save $ 1,700 ($ 47 per month) during a three-year personal loan by shopping at a lower interest rate – potential savings of 35 percent. LendingTree’s analysis assumed that borrowers would have a $ 10,328 Personal loan for three years – the average amount sought by borrowers. The cost differences become more dramatic as the loan amount increases and the loan term increases.

“The APR on personal loans tends to be higher than secured debt, which could explain the wide range between the lowest and highest offers consumers receive on the LendingTree platform,” explains Kali McFadden, Senior Research Analyst at LendingTree. “The conclusion is very clear: Consumers can and should definitely go on a bargain hunt for personal loans.”

Analysis results:

  • Eligible borrowers can average $ 1,700 ($ 47 per month) over the course of a three-year personal loan by purchasing at a lower interest rate, a difference of 35 percent.
  • The spread between the highest APR and the lowest APR offered to the average consumer is 8.79 percentage points (879 basis points).
  • Consumers with lower credit scores (640 to 679) can average up to $ 1,726 ($ 48 per month) – the highest savings of any credit rating group in the study.
  • The offers with the highest APR for borrowers with the best credit scores (760 and above) are more than double the lowest.

Lenders also offer a wide range of APR rates to borrowers with excellent credit ratings

People with excellent credit scores may feel that they will always get the best interest rate no matter which lender they choose. However, LendingTree’s study found that the gap between the lowest and highest APRs offered to those with excellent credit is just as great as the gap in the rates offered to those with average credit.

A person with a credit score of 760+ had a low rate of 7.55 percent APR and a high rate more than double that amount – 16.38 percent APR. With a three-year personal loan worth $ 10,328 – the average amount required by borrowers – if one accepts that a high interest rate is additional $ 1,566.11 to the cost of borrowing.

The gap between the lowest and highest APR offered to borrowers with excellent credit was 8.82 percentage points, which was very close to the 8.55 difference for borrowers with decent credit (640-679).

The study found an even wider spread between the APR offered to those who hit the line between good credit and excellent credit. For people with scores between 720 and 759, there was a 9.28 percent gap between the lowest APR and the highest APR offered. Over three years, someone who accepted the higher rate would almost pay $ 1,700 additional interest on their loan.

Shopping for personal loans

Difference in the loan term offers
for the average 3-year personal loan ($ 10,328)
May 2018


Average APR offers

Monthly payments

Total payments over 3 years

Credit score range

minimum

Maximum

Spread

minimum

Maximum

Spread

minimum

Maximum

Spread

640-679

24.46%

33.01%

8.55%

$ 408

$ 456

$ 48

$ 14,678

$ 16,404

$ 1,726

680-719

17.19%

26.02%

8.83%

$ 369

$ 416

$ 47

$ 13,291

$ 14,984

$ 1,694

720-759

10.69%

19.97%

9.28%

$ 337

$ 384

$ 47

$ 12,118

$ 13,812

$ 1,695

760+

7.55%

16.38%

8.82%

$ 322

$ 365

$ 44

$ 11,575

$ 13,141

$ 1,566

All borrowers

18.51%

27.30%

8.79%

$ 376

$ 423

$ 47

$ 13,538

$ 15,239

$ 1,701

Shopping is most important when your credit score is low

When looking for a loan, it is always a good idea to compare options, but it is important to look for the best APR if a borrower’s credit score is average.

The study found that those with the lowest credit points had the smallest difference, 8.55 percentage points, between the lowest average annual percentage rate and the highest APR. The lowest average is 24.46 percent and the highest is 33.01 percent for those with credit scores between 640-679.

However, when looking at the total additional cost over the life of a loan, fair credit people who don’t shop end up paying more than any other loan category analyzed – up to $ 1,726.03 More. That’s about $ 160 more than the additional cost for those with the highest creditworthiness.

To view the full report, visit https://www.lendingtree.com/personal/lendingtree-study-shopping-around-for-personal-loans-can-save-consumers-35/.

Methodology:
The average annual percentage rate offered and loan amount was calculated for consumers with a score of at least 640 who inquired about a personal loan May 2018 on the LendingTree platform, where users can receive loan offers from multiple lenders. The loan amount represents the average loan amount that individual borrowers are in May 2018 on the LendingTree platform.

About LendingTree
LendingTree (NASDAQ: TREE) is the nation’s leading online credit marketplace, helping consumers compare across a full range of credit and credit-based offerings. LendingTree offers an online marketplace that connects consumers with multiple lenders competing for their business, as well as a range of online tools and information to help consumers find the best loan. Since its inception, LendingTree has supported more than 65 million loan applications. LendingTree provides free monthly credit scores through My LendingTree and access to its network of 500+ lenders offering home loans, personal loans, credit cards, student loans, business loans, home loan / lines of credit, auto loans, and more. LendingTree, LLC is a subsidiary of LendingTree, Inc. For more information, visit www.lendingtree.com, dial 800-555-TREE, like our Facebook page and / or follow us on Twitter @LendingTree.

MEDIA CONTACT:
Megan Greuling
704-943-8208
[email protected]

SOURCE LendingTree

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