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Whether you are shopping for a new home, car, recreational toy or RV, applying for a loan can be intimidating. At some point, all of us will need to apply for a personal loan. Rather than going in blind and walking out of a lender's office disappointed, you can go in educated with your finaces in order and apply with confidence.

Follow these tips for how to find the best loan with a low interest rate:

1. Improve your credit score.

According to the Federal Housing Administration (FHA), a credit score of 580 or higher will qualify you for an FHA loan with a 3.5% down payment. Conventional loans usually require a credit score of at least 620.

Along with routinely monitoring your credit report and fixing any errors you find, follow these tips to improve your credit score:

•Keep your credit card balances below 30% of your credit limit.

•Pay bills on time, every time.

•Pay off any overdue balances.

•Pay down debt.

•Keep any old lines of credit open.

•Have a balanced mix of credit accounts.

•Limit credit requests or avoid applying for new lines of credit.

2. Save for a large down payment.

A generous down payment reduces the risk for the lender. Reducing the lender's risk can also reduce some things for you. Have you ever wondered: how do I get the best rate on a loan? Paying 10% or more down on a conventional loan will increase the likelihood of qualifying for a lower rate. A large down payment helps you save on more than just interest, though. The total amount of money you need to borrow is less, so you will have lower monthly payments. With a bigger down payment, your mortgage insurance costs will likely decrease and you may not have to pay private mortgage insurance or other fees. Check out our financial calculators to determine how your loan amount, interest rate and term will affect your monthly payment.

3. Check for rate discounts. Before you apply for any loan, do your homework. Review all your loan options. Find out what rates you qualify for through different lenders and what terms are most appealing to you and ideal for your particular financial situation.

4. Avoid taking out other loans before closing.

There are several things that can hurt your credit score. A big one is taking out another loan. Lenders will pull your credit right before closing to ensure your debt-to-income ratio has not changed since you prequalified for the loan. So, while you may think it's being proactive to finance new furniture for your new home before closing on it, you should probably wait. That one purchase could be the reason your contract falls through.

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5. Avoid job hopping.

Lenders will check to see how long you have been with your current employer. A long, stable employment history will work in your favor. Having a steady and consistent job and income show a lender that you can make your loan payments. If a new job presents itself during the loan application process, it's better to avoid quitting or changing jobs before you close. It could cause the loan to fall through or delay the mortgage process, especially if it's a job where your income is based on commissions, overtime or bonuses or if you will be making less money. And if you have been considering opening your own business—don't pull the trigger just yet. Most lenders won't approve your loan application unless you have been self-employed for at least two years.

If a job position or pay structure change is imminent, tell your lender as soon as you know. Making a job change in the same field with no pay change, or making more money, is usually not a cause for concern. Are you relocating? It can get complicated to get the best mortgage loan when you have to relocate for a job, but it's not impossible. Talk to your lender about the relocation before moving and they can help you handle the mortgage loan process.

If your credit score is lower than you’d like or if you haven’t met loan qualifications in the past, take heart. Follow these strategies and, over time, you will improve your chances of getting a loan at a competitive rate.

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Representative Example: If you borrowed $5,000 over a 48 month period and the loan had a 8% arrangement fee ($400), your monthly repayments would be $131.67, with a total pay back amount of $6320.12 which including the 8% fee paid from the loan amount, would have a total cost of $1720.12. Representative 18.23% APR.

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