A personal loan has emerged as the most popular financial tool in India’s debt market. With easy accessibility, unrestricted end-use, simple eligibility and minimal documentation, personal loans serve as one of the best ways to meet your financial obligations. Whether it is a planned wedding or travel or an unplanned medical expense, a personal loan can serve you right. Today, you can simply download a loan app and avail a quick loan in just a few minutes.
But with the increased ease of access to personal loans, you must also know the right tips to get the loan at the lowest interest rate. Interest rate has a significant effect on your affordability. Different lenders will offer you the loan amount at different interest rates. Check out a personal loan app to discover the best rates you are eligible for.
Read on to discover a few expert tips on getting the best personal loan interest rate.
How Can You Get A Personal Loan With A Low Rate Of Interest?
Lending institutions consider a number of factors before approving your personal loan application. This includes the loan amount, your employment history, credit score, ability to repay the loan, and more. These loans generally have a higher interest rate than loans for homes and cars.
But with smart financing you can avail a personal loan at the lowest interest rate. Here are six ways to do it.
- Having a high credit score is crucial
Most lenders consider your credit score for determining your loan eligibility. A credit score is a reflection of your creditworthiness. Lenders consider candidates with a high credit score as low-risk borrowers. That’s why they are open to offering them a personal loan at better terms. If you have a solid credit score, then you can negotiate with your lender for a lower interest rate.
- Compare personal loan interest rates
Different lenders will offer you the same loan amount at varying interest rates. Even a slight change in the interest rates can help you save big. In addition to the rate, check the type of interest charged on your loan. When comparing the interest rates, sort out the lenders offering you the loan at the lowest interest rates. These days, personal loan apps are rising in popularity for their reduced interest rates. You must also check the other fees and charges levied on your loan by the lender.
- Wait for the festive offers
If you don’t already know this hack, then many lenders run promotional offers during the festive season. They might offer you a loan at a reduced interest rate, waive the processing fee or offer other benefits during these festive offers. Thus, if you are planning to avail a loan for a high-end purchase, then waiting for the festive season might help you get a better deal. Keeping checking the loan app on your phone to discover such promotional offers.
- Talk to your existing lender
Before starting your hunt for a new loan, make sure to talk to your existing lender or a lender with whom you have an existing relationship. They may offer you pre-approved loans at better terms. Going for a lender with whom you have an established relationship will not only make the process faster and hassle-free, but also bring you many benefits.
- Consider your Employment History
Employees working in the government sector or reputed multinational companies are more likely to get a loan at better terms. This is because of the high-income stability that comes with these jobs. In addition to this, lenders also require you to have a minimum of two years of work experience, including at least one year with the current employer. You can check out the banks or loan apps offering corporate offers on personal loans.
- Debt-to-Income Ratio
You might have a good salary and solid credit history, but if your ongoing debt is too high, then also the lender may see you as a risky borrower. They assume that there is a high chance of loan default because of the increased EMI burden. Ideally, your total debt-to-income ratio should be below 50%. You may calculate your debt-to-income ratio by deducting your monthly debt payments from your gross income. You may consider closing some of your previous debts before availing a new debt.
Conclusion
Ignoring the personal loan interest rate while availing a loan might lead you to a debt trap. You can use an online interest rate calculator to calculate your estimated monthly payments and the overall expense of the loan.
You can use a personal loan app to calculate your loan EMI and understand the impact of interest on your loan amount. Loan apps serve you best when you need instant cash of small sizes to meet your urgent financial obligations. For larger sums, you can rely on your bank or an NBFC.
Must Read: 4 Ways To Maintain A Good Credit Score
