Availing a personal loan is the best way to tackle urgent financial needs. From helping you finance your child’s education to taking care of your medical needs, a personal loan can is an all-purpose loan that can be availed by paying interest on the principal amount. While the usual human tendency is usually to ‘get more by paying less’, very often people look for the best deals on personal loan interest rates that ensure the heavy interest rates charged by the banks don’t dig a hole in one’s pocket. Though your eligibility criteria help lenders determine the interest rate, there are several ways by which you can ensure you fetch a good deal. Read on to know about the five ways by which you can fetch a good deal on the personal loan interest rate.
Have a good credit score: Your credit score determines your creditworthiness and is one of the primary eligibility factors considered by lenders. This score ranges from 300-900 with 300 being the lowest and 900 being the highest. A high score depicts good credit behaviour and repayment capability. Banks and online lenders generally prefer offering loans to individuals with a minimum credit score of 650- 700. Since credit score plays an important role in determining your interest rate, you can look to improve it by: clearing all your debts, paying off the loan EMIs on time, avoid using too much of your credit card balance, making limited loan applications, checking your credit report, owning a mix of secured and unsecured loans and others. Also, when you avail a loan, ensure that you make timely repayments as your credit score reflects your repayment behaviour. Make sure you don’t have any outstanding balance on your credit card and pay the minimum amount due at least and not default the payment altogether. Also, repayment terms, interest rate and the loan amount is decided based on the credit score, therefore maintaining a good score is imperative.
Compare online: Doing a bit of research online will probably help you fetch the best deal on the personal loan interest rate. Therefore, before zeroing down on one lender, compare interest rates offered by various banks and NBFCs online. Opt for the lender that offers the best interest rate along with quick disbursal and online application process. You can use a personal loan EMI calculator to get an estimate of the EMI you will have to pay at different rates of interest. Additionally, this personal loan EMI calculator is free to use and is available online on almost every lender’s website.
Check for seasonal offers: Watch out for special offers offered by lenders. To match up to the competitive interest rates offered by other banks and NBFCs, online lenders usually offer personal loans at a low-interest rate. Such offers are mainly launched at the time of the festive season and are offered for a limited period. Hence, to avail the best deal on the personal loan interest rate, it is necessary you watch out for such offers. You will be notified about these offers usually through SMS or email.
Professional credentials: When applying for a personal loan, you must know that your professional credentials can have a huge impact on the personal loan interest rate offered to you. If you work for a reputed company, then you can avail a personal loan at an interest rate as low as 9%. Working for a well-established company gives the lender a sense of assurance regarding timely loan repayment and hence, you get the benefit of the low interest rate. Additionally, if you work for a bank or NBFC, then chances of you getting an in-house employee discount are high.
Relationship with the bank: If you are an existing customer of the bank and have previously paid secured or unsecured loan EMIs on time, then there are high chances that the bank may offer you a personal loan at a low-interest rate. This ensures that responsible customers have the privilege of getting an attractive deal on the interest rate. Further, if you avail a loan from a bank you hold a savings or current account with, then it works well for you as the lender bank is aware of your repayment capacity and this gives them a sense of assurance in terms of loan repayment.
Conclusion
Getting a personal loan at a low-interest rate is possible if you keep the above points in mind. Remember, when getting a personal loan, repayment of the EMIs on time is imperative as it helps you stay in the good books of the lenders that can further help you fetch a personal loan at low-interest rate. Further, it is also significant that you have a good financial plan in place to ensure you don’t fall into a debt-trap.
