Ways to Avail Better Interest Rates for Personal Loan

Facing a sudden emergency or running out of funds? 

It could a medical emergency where your insurance is just not enough to cover the expenses. Likewise, it could be for your wedding or that holiday you have been longing for. There can be multiple situations in life when you might face a financial crisis and need immediate help. 

In situations like these, a personal loan is your saviour! Personal loans are hassle-free. They require minimum documentation and are disbursed in no time. 

However, since they are unsecured loans, the Personal Loan Rate Of Interest can be higher. The smarter way is to look for the best deal. Deals with lower interest rates can reduce your burden of bearing high monthly EMIs. 

With the growing technology, it is easy to get a personal loan. But it is equally hard to get one at a lower rate of interest. There are many factors that lenders consider. No worries! We have got you covered.

Keep scrolling to know how you can get the best interest rate for your personal loan.

How To Get a Good Personal Loan Rate Of Interest?

Here are some factors that can help you to get a personal loan at good interest rates:

Maintaining a Good Credit Score 

A score of 750 and more is often regarded as a healthy credit score. It makes it easier for you to get loans. This helps you to get the required loan amount with the desired repayment term at an affordable interest rate. 

This is because individuals with a higher credit score are given personal loans at a lower interest rate. A 750+ credit score indicates solid financial management and higher creditworthiness.

You can maintain a good credit score with ease by paying your dues on time, limiting the credit utilization ratio to 30%, and avoiding impulsive credit card purchases. Your lender will have more confidence in your ability to repay loans.  

Comparing the Lenders to Get the Best Deal

Comparing the lenders is the wisest method for getting a personal loan. Time invested in thorough research will directly help you save a lot. In case you’re wondering, it is quite easy to compare personal loan offerings online. 

All you have to do is evaluate each loan’s advantages and benefits to pick the one with the lowest interest rate. It might take some time, but it will be worth it. While comparing the loans offered by several lenders, you may also check eligibility, EMI payment, and loan amount. 

There are several online personal loan EMI calculators which you can use to calculate interest rates. This will surely help you in getting a clear idea about the monthly payments. 

Try to Have a Good Repayment Record

Needless to say, you must always try to repay your loan and credit card bills before the due date. This helps you in boosting your credit score. Also, it aids in lowering personal loan interest rates.

Try to Pay Off Your Existing Loans

You are less likely to get a lower interest rate on a new personal loan if you have an existing loan. Therefore, before opting for a personal loan, aim to clear out all previous loans. If not, at least reduce your overall debt to less than 40% of your monthly earnings.

Check for Ongoing Special Deals

Always keep an eye on special deals, which are generally offered during the festive season. Banks often send seasonal or festive deals to existing lenders via email and text messages. 

You may also check your financial mobile apps. See if there are any pre-approved personal loan deals or limited-time discounts that you can avail of right away without having to provide any paperwork.

This can ultimately enable you to reduce your long-term loan payback costs.

Maintaining a Good Relationship With the Bank

A personal loan at a lower interest rate and with better terms of service may be easier to get if you already have a solid working relationship with a bank or lender.

This is because the bank or lender is aware of your responsible credit behaviour. Moreover, there is often less risk involved than lending money to a new client.

Interest Calculation Method

It is usually necessary to consider how a lender determines the interest charged on personal loans. Loans are usually given at lower interest rates. You may end up paying more interest rates sometimes because of the loan tenure. Long-term loans have a high rate of interest.

Remember that you can opt for personal loans at either a fixed interest rate or a reduced interest rate. When the interest rate is fixed, it is calculated on the full loan term on the total loan amount you have borrowed.

Now, say you have opted for the reduced interest scheme. Then, the interest on your personal loan is only calculated on the amount that is yet to be paid. Applying for a personal loan with a decreasing interest rate is a smarter choice. It will end up costing you less money on the interest.

Maintaining a Healthy Professional History 

Long-term stability in your career is beneficial for getting personal loans. Also, you can get them at a lower rate of interest.

Lenders frequently demand that you should have a minimum of two-year employment history, including one year with their present company. 

Personal loans with better terms and cheaper interest rates are frequently provided to those working with reputed public, private, state, or central government organizations. 

So, lenders believe that applicants having stable employment and income tend to repay the loan timely.

Wrapping up 

It is important to check the interest rates while applying for a personal loan. The pointers discussed in this article will help you understand Personal Loan Interest and Personal Loan Rates. To understand other financial aspects and types of loans, do visit the website of Piramal Finance. You will find many informative articles on various topics.