A personal loan is a magical weapon to consider when you face short-term or temporary money issues. Eventually, it can be your arsenal against financial brutes that cause you sleepless nights. However, a number of people think that personal loans come with extensive interest rates that can be unbearable sometimes. Yet, there is a most intriguing fact about personal loans these days.
Some lenders in India offer low interest rate personal loans, which truly depend on numerous factors within your control. Below mentioned are some solid factors that can partially influence your interest rates for personal loans:
- You age
- Your annual income
- Your current financial status and financial history
- CIBIL score
- Credit history
- Nature of employment
So, let us discuss how you can avail yourself of a personal loan with lower interest rates.
Procedure to get the more moderate interest rate for personal loans:
Are you wondering the means to appeal for a personal loan with a more moderate interest rate? Here are some valuable tips that you can count to avail of the loan:
- Never miss any repayment time – Missing your loan or credit card repayment opportunity will adversely affect your credit score. In general, lenders consider the repayment history of an applicant before deciding the personal loan interest rates. People who have always paid credit card bills or EMIs on time are more likely to receive favourable interest rates for the loan.
- Improve Your Credit Score – To indicate yourself creditworthy, you have to maintain a high credit score. In India, financial lenders, banks or NBFCs offer the lowest possible personal loan interest rates to applicants with a high credit score. Henceforth, you should always review your credit score prior to your application for the fund The credit score must be between 300-900. However, lenders generally consider applicants with a minimum 750 credit score to offer facilities.
- Compare Interest Rates – Ere applying for a personal loan from any specific lending company, you must analyse interest rates instructed by various banks and NBFCs. It will help you get very competitive interest rates for personal loans.
- Take offers into account – Funding institutions and banks commonly offer exceptional rate of interest for a restricted period during festivities. So, if you consider applying for the loan during such an offer is running, your lender may offer you lower interest rates.
- Negotiate with the Lender – An existing customer usually has a good connection with the banker house. It helps the applicant negotiate with the lender for lowering interest rate to get the personal loans. We advise you to submit a written request for the negotiation to your provider.
Affecting factors of Personal Loan Interest Rates:
The below mentioned are some common factors that generally affect your personal loan interest rates:
- Age – To apply for any loan in India, there are some guidelines for the applicant’s age that one must follow. If any applicant is near his retirement age, he/she may get charged with high interest rates.
- Employment type – Fund providers offer different interest rates for salaried people and self-employed professionals.
- Earning – The earning proof of the applicant plays an influential role in the approval of the loan. Generally, lenders take into account an applicant’s income while deciding the interest rate. People with extraordinary income proof pose a lower risk for the lender organisation and are mostly offered convenient interest rates. On the other side, people with moderate or below income usually have to bear a higher interest rate.
- Details of the employer – If your employer is a reputed organisation or company, you are more likely to receive a lower interest rate.
- Applicant’s relationship with the lender – Commonly, an existing customer always gets some additional benefits from the banks. While applying for the loan, the existent client will get more profound interest rates since they have a good rapport with the fund provider.
Floating interest rates v/s Fixed interest rates – Which to consider?
If you wish to avail of a personal loan, there are two types of interest rates that you should know – Fixed interest rates & Floating interest rates. Under fixed interest rates, the fund lending company will charge you the equal interest rates during the entire loan restitution period.
On the opposite side, the floating interest rate is a variable associated with the MCLR. Therefore, it generates a inconstancy in the interest rate as and when the MCLR reforms.
If you do not mind a fluctuating interest rate, you can avail of a floating interest rate. This scheme comes with the benefit of a variable interest rate. Your pay off amount will get lessened when the rate of interest is below.
However, the benefit of opting fixed interest rate is that the applicant already is aware of exactly how much he/she will get charged during the tenure.
If you are looking for low interest rate personal loans, we hope this write up will help you capture a reliable decision ahead. It’s always ideal to evaluate your payable before you apply for the loan.
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