NEW YORK (Newswire.com) – Credello: Thanks to the Federal Reserve’s raising interest rates, many loan borrowers are getting sticker shock looking at their loan terms. But which loans are getting the highest rate increases? Here’s what you should know.

The loans with the highest interest rates

Borrowers are seeing the biggest interest rate spikes on short-term loans, particularly those that run for three to five years. A report by Credible found that rates in April 2023 on 3-year, fixed-rate loans increased by 10.63%, while 5-year, fixed-rate loans averaged an increase of 9.41%.

What’s most interesting is that it seems credit scores weren’t a significant factor in determining rates. Credible found that these rate increases were happening for borrowers with credit scores of 720 or more, a score that’s traditionally seen as worthy of the most competitive (i.e., lowest) rates possible.

Why are these loans getting such drastic rate increases?

Three- to five-year loans are typically categorized as “short-term” personal loans. There are a few differences between long-term and short-term loans, but the most significant difference is the interest rate attached. 

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Short-term loans usually have more aggressive terms and conditions because the lender makes less money on them over time than on a longer loan, like a mortgage. The risks of short-term personal loans are also a factor lenders consider, as these loans are easier to get for those with lower credit scores. 

How to get the best interest rate possible on your personal loan 

Getting the best interest rate on your personal loan is important to ensure you are paying the lowest amount of money over the life of the loan.

Improve your credit score.

Improving your credit score is the simplest way to ensure you get the most competitive interest rates possible. While interest rates have risen dramatically for all credit scores, the better scores will always have more options available and the best rates possible. The reason for this is, again, due to risk. Generally speaking, lenders will see those with lower scores (~625 or lower) as less responsible with their finances than someone with a higher score. Some lenders have realized this could be an unfair practice, particularly to minorities or those previously underserved by banks, and have begun adding new criteria to their decision-making algorithms. However, for the most part, improving your credit score is the easiest way to get a better offer.

Credit scores are a mix of factors weighted based on their importance determined by credit reporting bureaus. The two most significant factors are the number of late payments on your record and the amount of credit you have available (known as the “Credit Utilization Ratio”).

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To increase your credit score quickly, focus on these two factors. Try to make the minimum payment on time every month on any outstanding credit card balances or loans. Next, try to get your credit card balances below 20% of your available credit. Focusing your effort on these two factors will cause the fastest changes to your score.

Shop around for the best rates.

If you’re not seeing rates you like, shop around! Many lenders will offer promotional rates for both new and returning customers, so start with the lenders you already have an established relationship with, as they’ll typically be the ones to approve your application the fastest.

However, if they’re not willing to give you the terms you want, check out loan comparison sites with the most up-to-date information with interest rates lenders offer to those with similar credit scores. They’ll also typically have reviews from other borrowers and ratings that give you insight into your chances of getting approved and details on what your experience could be working with them.

The bottom line

While interest rates on personal loans have slowly been creeping up for the past few years, there’s been a drastic spike in rates caused by the Federal Reserve’s interest rate hikes to combat inflation. However, that doesn’t mean there aren’t great personal loan rates out there still for those with good credit scores. By improving your credit score and shopping around for the most competitive interest rates available, you should get the best possible terms for your loan.

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About Credello

Credello is a financial tech company offering a personal finance tool that simplifies financial decisions through personalized, on-demand recommendations — so users can borrow, save, or invest with confidence. Credello believes that finding the right financial product should be as easy and interactive as online shopping, and we are on a mission to make that possible. For more information, please visit https://www.credello.com. 

Source: Credello

NEW YORK (Newswire.com) – Credello: To combat inflation, the Federal Reserve (“The Fed”) has raised its benchmark interest rates to levels not seen since the Great Recession. While these hikes are great for savings accounts and CDs, those considering getting a new personal loan are experiencing sticker shock at the new rates. 

I already have a personal loan, is my interest rate increasing?

It depends on the type of loan you have. 

Most unsecured loans that are already active and fixed-rate will not incur any interest rate changes. This goes for personal loans, consolidation loans, signature loans, etc. However, missing payments or defaulting on a signature loan or other unsecured loan could make you incur new interest rates as a penalty for the duration of the loan or until you’re back in good standing. Check your loan’s terms and conditions for details on what you should expect if you fall behind on payments.

Secured, fixed-rate loans like mortgages also shouldn’t see any change to their interest rates. Again, this is only if you stay in good standing with the lender so it’s critical you know the terms you’ve agreed to for your loan regarding when you could expect a change in your rate.

Variable-rate loans, both secured and unsecured, are loans that have fluctuating rates based on The Fed’s benchmark rate. These are the loans that will most likely be affected by the increases made by The Fed. 

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How can I tell what type of loan I have?

Knowing the type of loan you have is critical for determining not only how much you’ll pay in interest but how your loan is affected by market conditions. The easiest way to determine which type of personal loan you have, or are applying for, is to check the terms. However, there are a few quick ways to determine which loan you have (or could get):

1. Do you have to put any collateral up to get the loan? These are considered secured loans. The most popular types of secured loans are auto loans and mortgages. Unsecured loans don’t require any kind of collateral and are often what you’ll see for personal loans, signature loans, etc.

However, don’t group all unsecured loans together as there are some significant differences between signature loans and personal loans you need to be aware of before applying.

2. Do you only see one interest rate listed? Typically, this means your loan is (or will be) a fixed-rate loan. However, check to see if there are any asterisks or fine print that specifies whether this could change. 

3. Is it a credit card? Credit cards are unsecured, variable-rate ways to borrow money and will be affected by Fed rate hikes. There are some secured credit cards, too, and are also variable-rate. 

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A few tips to avoid interest rate increases

1. Look for promotional consolidation offers. Many lenders offer promotional rates that last for a limited time. Consolidating your debt into one loan can lower your interest rate, too.

2. Shop around. Rates can vary significantly from lender to lender, so compare rates before settling on a plan.

3. Make a payment plan. If you’re not able to pay off your entire balance each month, making payments on time will help keep your interest rate lower and extend the life of your loan.

4. Pay more than your minimum payment every month. Even an additional $5 payment will help you avoid getting hit with higher rates that take longer to pay off. 

The bottom line

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Knowing your personal loan type and interest rate is key in determining how your loan will be affected by The Fed’s interest rate hikes. Stay up to date on the terms of your loan to ensure you’re not hit with unforeseen penalties or rates.

About Credello

Credello is a financial tech company offering a personal finance tool that simplifies financial decisions through personalized, on-demand recommendations — so users can borrow, save, or invest with confidence. Credello believes that finding the right financial product should be as easy and interactive as online shopping, and we are on a mission to make that possible. For more information, please visit https://www.credello.com. 

Source: Credello

Expedites Free Software Upgrade Availability

Hyundai and AAA Insurers have announced that they will collaborate to offer insurance options for owners of certain Hyundai vehicles without push-button ignitions and immobilizing anti-theft devices. The collaboration comes after the increased criminal activity targeting Hyundai vehicles, which was popularized on TikTok and other social media channels.

Under the program, AAA insurers will issue new and renewal policies for eligible affected Hyundai customers. Consumers can visit AAA.com/insurance to receive a quote. The program will be available in all states except Alaska, Massachusetts, and Washington (state).

Hyundai has also expedited the rollout of the free anti-theft software upgrade for affected vehicles. The upgrade is designed to prevent the vehicles from starting during the method of theft popularized on TikTok. All of the nearly 4 million vehicles involved will be eligible for the upgrade this week, two months ahead of the original schedule.

Additionally, for a smaller group of 2011-2022 model year vehicles that cannot accommodate the software upgrade, Hyundai will reimburse those owners for their purchase of steering wheel locks. Hyundai is also preparing to provide this subset of customers with the option of obtaining reimbursement to offset their purchase of a different anti-theft device, such as an alarm kit.

All Hyundai vehicles produced since November 2021 are equipped with an engine immobilizer as standard equipment. In addition, Hyundai continues to work with more than 450 law enforcement agencies across the country to provide no-cost steering wheel locks to affected communities.

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To generate awareness of the software upgrade and drive completion rates among customers, Hyundai is actively promoting www.HyundaiAntiTheft.com. This site provides affected customers with information on available solutions and directs them to schedule an appointment at a local dealer if their vehicle lacks an engine immobilizer and is eligible for the software upgrade.

The collaboration between Hyundai and AAA Insurers to offer insurance options for customers affected by the method of theft popularized on TikTok is a welcome development. The expedited rollout of the free anti-theft software upgrade for affected vehicles and the provision of steering wheel locks to affected communities are also commendable initiatives aimed at ensuring the safety and security of Hyundai customers.

Eligible Affected Vehicles

About the Software Upgrade
The software upgrade modifies certain vehicle control modules on Hyundai vehicles equipped with standard “turn-key-to-start” ignition systems. As a result, locking the doors with the key fob will set the factory alarm and activate an “ignition kill” feature so the vehicles cannot be started when subjected to the popularized theft mode. Customers must use the key fob to unlock their vehicles in order to deactivate the “ignition kill” feature.

The free upgrade will be performed by Hyundai dealers and will take less than one hour for installation. Following completion of the upgrade, each vehicle will be affixed with window decals to alert would-be thieves that the vehicle is equipped with enhanced anti-theft technology.

About the AAA Insurance Offering
The program will be available in all states with the exception of those states where AAA does not offer insurance as outlined below.

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• Alaska
• Massachusetts
• Washington (state)

Consumers can visit AAA.com/insurance to receive a quote.

https://www.abc27.com/business/press-releases/cision/20230413LA70178/hyundai-and-aaa-insurers-collaborate-to-offer-insurance-options-for-customers-affected-by-method-of-theft-popularized-on-tiktok/

https://stmdailynews.com/category/consumer-corner/automotive/

Source: Hyundai