Low cost loans are very desirable because with low interest rates come low monthly payments. That means borrowers are able to pay back their loans much quicker. Since your payments are low and you pay back your loan quicker that means the bank makes less money. That's one of the main reasons it is so difficult to secure a low cost loan. The other reason is because you have to have excellent credit and most people don't.

Here are 3 things that will determine if you qualify for a low cost loan.

Your Credit Score

As I just stated, you have to have excellent credit to get a low APR loan. You must be considered a low risk. The lender will pull your credit report and perform a risk assessment. If you have paid your bills on time 95% of the time, you will probably pass the risk assessment. On the other hand, if you have a lot of late payments on your credit report you will automatically be disqualified.

If you are considered high risk you will have to pay a higher APR to borrow money. Generally speaking low APR loans are reserved for those with a credit score of 720 or higher.

The Amount Of Your Down Payment

If you are trying to get a low cost loan to purchase a home the amount of your down payment will play a huge factor. Most lenders will offer low cost loans to those who put down a large down payment. This is because they will have something to fall back on should you default and stop making your mortgage payment. In other words, a large down payment sort of acts as insurance and protects the lender. Generally speaking you will need to make a 20% down payment in order to get a low APR on your mortgage loan.

Your Employment History

The length of time you have been on your job plays a huge role in whether or not you qualify for a low cost loan. A stable employment history means you will have income coming in every month to make your monthly loan payment. If you have been on your job for less than 6 months your application will be immediately rejected.

You basically have to prove to them that you are not a huge risk and will be able to pay the money back. The only real way to do that is to show that you have been employed for a decent amount of time.