Is there a business opportunity that you feel you just can’t pass up but don’t have the funds necessary to commit to it? Have you tried to get a business loan, but don’t qualify? Perhaps you haven’t even started the business yet. A personal loan might be just what you need to take advantage of the opportunity.
Even if you’ve applied for and received a personal loan before, now might be a good time to see what interest rates may be available to you. While the Federal Reserve has increased rates in an effort to slow inflation and hikes to federal funding rates tend to make borrowing funds more expensive, not all financing is the same, and not all interest rates on loans are rising at the same rate. The Federal Reserve has indicated that there will be more increases throughout 2022, so now may be a great time to consider a loan.
Fixed-rate vs variable-rate loans
Most personal loans are fixed-rate loans, meaning they have interest rates and fees that won’t change over the course of the loan. They aren’t tied directly to the Fed rates, so – once you’ve accepted the loan — you can rest assured that the annual percentage rate will never change. As you may be able to guess, variable-rate loans are more dependent on market conditions and are typically aligned with the federal funds rate. SBA loans can have a variable or fixed rate, so it’s a good idea to explore all your options to find a rate that works best for you. While lenders are able to set rates as they please, the SBA prohibits rates from exceeding a specific percentage above what they define as a standard base rate.
Is it a good time to get a personal loan?
Considering the Federal Reserve may be increasing interest rates throughout this year, now might be a great time to apply for a personal loan if you want to ensure you get a the lowest possible interest rate. Although the rising rate environment does make it seems like you should act now, you shouldn’t rush into things if you’re unsure.
Could rising personal loan interest rates affect an existing loan?
The answer to this question depends on the kind of loan you have. Obviously, if you get a fixed-rate loan, you have nothing to worry about. However, if you have a variable-rate loan, you will likely see your interest rate rise as the federal fund rate rises.
Will rising personal loan interest rates affect new loans?
Rising interest rates will ultimately affect all new loans because the Fed rate reflects what is costs for banks to borrow money and most lenders base their rates on the federal fund rate. Considering the Fed will likely continue to raise rates, personal borrowers will likely see rates get higher. This is why it’s important to act quickly and lock in a lower interest rate for a personal loan if you know you need one.
While interest rates may be increasing, the factors that determine whether you will be approved for a personal loan and the type of rate you get generally remain the same. To improve your chances of getting a more favorable interest rate, you’ll want to improve your credit score because lenders will always offer their best rates to borrowers with good credit.
As expert loan advisors, we can help you sort through a variety of funding options while explaining the choices in an understandable way. Unsecured Funding Source prides itself on its friendly guidance and professional expertise. Apply here now to get an unsecured business loan fast and get a response within hours!