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The best financial alternative to fulfil your immediate financial needs is by availing of the Lowest Personal Loan Interest Rates. Personal loans can be helpful in funding most of your financial requirements, including your child’s marriage, a vacation abroad, any medical emergency, business expansion, debt consolidation, and so on. However, to reap most of the benefits of a personal loan, it is crucial to get it at a competitive rate of interest. It will not only help you in reducing your equated monthly instalments (EMIs) but also in finishing off your loan quickly.
So, how do you make sure that you get a low personal loan interest rate?
Here are the four ways through which you can avail of the best personal loan rate:
- Maintaining a good credit score: A credit score is a 3-digit number that shows your creditworthiness based on your past repayment behaviour. Credit score usually varies between 0 and 900. The closer your score to 900 is, the better will be your chances to get a lowest personal loan interest rate. For a personal loan, most lenders prefer a borrower to have a credit score of 750 or above. Some lenders can also provide personal loans for a score of above 700. Make sure you always maintain a good score. Having an excellent CIBIL score can help you negotiate for a lower rate. If you have a low credit score, you can still get a personal loan through online lenders, however, the rates will be higher.
- Comparing personal loan offers of different lenders: Conducting some research before you apply for a personal loan is always helpful and can also get you a better rate. Make sure you compare the best personal loan offers of the top lenders before finalising the best for you. You can compare the features, interest rates, processing fees, charges, prepayment terms, documentation process, and eligibility criteria of different lenders. This will help you choose the best deal based on your requirement. Once you have chosen the right option, check your eligibility and apply online for a personal loan through the lender’s website or application.
- Checking seasonal or festival offers: Many banks come up with some attractive offers on personal loans during particular seasons or festivals. For instance, most banks reduce their personal loan processing fee and/or interest rate during Diwali, New Year and other festivities. Some lenders also provide discounted rates to their loyal customers or a specific set of borrowers (such as women, government employees, etc.). Look for these offers and deals to avail the benefit of low interest rate.
- Using your professional qualification and employer’s reputation: It is a no-brainer that people having higher net monthly income and working with reputed companies get preferential rates than those with low income and unstable employers. That is because a reputed employer means better and regular income. Start-ups often struggle with paying the salaries of their employees. Also, high and regular disposable monthly income means better repayment capacity. Try to be stable with your work experience as many lenders require you to have at least 2 years of work experience (with 1 year at your current employer) before approving your loan. People with a stable job and high income usually get a lower rate on a personal loan.
Apart from the tips mentioned above, you can also use the following tricks:
- Bring in an eligible co-applicant (such as your parents, spouse, children, siblings) to apply for a loan. This will increase your loan eligibility and reduce the rate as the income of applicants and co-applicants are clubbed together to assess the personal loan eligibility.
- If you have any existing loan, make sure you repay it regularly on time. This will improve your credit score and will get you a better rate. It is advisable to finish your previous loan before applying for a new one to enhance your eligibility.
- If you have any credit card dues, clear them before applying for a loan. Any ongoing or pending debt can turn against your favour and make your loan’s rate higher.
- Club all your incomes to increase your eligibility and lower your loan rate. If you have any other source of income too, club it with your main income source when you apply for a loan. More income sources will make you more creditworthy and reduce your personal loan rates.
- You can also consider applying for a secure personal loan. Secured personal loans are provided against any asset (such as deposits, gold, etc.) and reduce the risk for lenders. Lenders have some assets to monetise if you default their loan. Hence they offer lower interest rates on these asset-backed loans. These loans are also useful if you have a low credit score.
- Make sure you receive your income through a bank transfer as most lenders ask for bank statements of salary accounts as income proof. Cash salaries can increase your loan interest rate to a huge extent.
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