This makes these already high-interest loans even more expensive because it raises the effective interest rate of the loan.

Some applicants will be told they can simply roll the cost of the insurance policies into their personal loan, financing the add-ons with borrowed money. These policies should be voluntary but employees of lending companies often pitch them as mandatory for anyone who wants a loan. For example, it’s generally a good idea to steer clear of installment loans that come with pricey credit life and credit disability insurance policies. When you've found the best interest rates, take a look at the other terms of the loans on offer. Compare the rates you can get from credit unions, traditional banks, online-only lenders and peer-to-peer lending sites. Once you're ready to shop for a personal loan, don't just look at one source. Contest any errors in your credit report, pay your bills on time and keep your credit utilization ratio below 30%. If you think you might be in the market for a personal loan in the future, it’s a good idea to get to work building up your credit score. The higher your credit score, the lower the interest rate you will likely qualify for on a personal loan. If you are looking at variable interest rate loans it's a good idea to ensure that you will be able to afford it even if the interest rate reaches the highest point possible in terms. These loans are riskier than those with fixed interest rates. Some personal loans come with variable interest rates that can increase after a period of time. Even a loan with a low interest rate could leave you with monthly payments that are higher than you can afford. What do we mean by affordable? True affordability is a factor of both the personal loan interest rate and the personal loan payments over time. Is it to pay off bills or move to a city with more job opportunities? Is it to eliminate high-interest credit card debt? All of these are scenarios where it might make sense to consider an affordable personal loan. Wondering if a personal loan is right for you? It’s important to ask yourself why you want to borrow money. Personal loan calculators help you know what to expect. Once you've figured out how much you need to borrow and how much you can afford to pay back each month, you can start shopping for personal loans. But like all debt, personal loans are not to be taken lightly.

Personal loans can be your ticket to paying off high-interest credit card debt or tackling big bills.

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