Ways to Get Best Personal Loan Interest Rate
A personal loan is a convenient financial deal when you want to fulfil a goal or require funds for emergency reasons. The best about personal loans is that you are free to use these funds for any purpose. It is one of the most convenient, versatile, and quick ways to get immediate funds for urgent requirements.
However, there is a catch to the benefits of personal loans: the whopping interest rates. The interest rates of different banks in India vary from as low as 7.9% p.a. and can go as high as 49% p.a. depending on their respective terms and conditions.
This article is dedicated to finding you the best personal loan interest rate. No matter what loan you opt for, the goal is to find the one with low interest. We will discuss the pivoting factors behind personal loan interest rates, ways to get the lowest personal loan interest rate, and other essential things you must consider.
Ways to Get the Best Personal Loan Interest Rate
Here are a few pointers that you must consider to avail personal loan at a low-interest rate:
The Credit Score is Crucial
The personal loan interest rate depends a lot on your credit score. Maintaining a high credit score shows that you are creditworthy. Banks and other financial institutions negotiate their interest rates if the applicant has a well-presentable credit score. Check your credit score before searching for the best personal loan interest rate. The score must be at least 750. If it is higher than that, your credit score is good.
Do Not Miss Repayments
It negatively affects your credit score if you have missed a few of your credit card or loan repayment. Loan providers go through your previous repayment history, and if it is all clear, it automatically builds a notion of trust. If you have timely paid all your previous loan EMIs or credit card bills, you might be charged a low-interest rate by the loan providers.
Never Miss the Offers
Banks and other financial organizations provide limited-time special offers on personal loan interest rates to create a good customer base. If you are looking for a personal loan with unbelievable interest rates, making the most of these benefitting offers is crucial. When you apply for a personal loan with a special interest rate offer, your long search ends there.
Use the Internet to Compare Different Interest Rates
This generation allows you to make the most out of the advantages of the internet. Visit the official websites of different banks and financial websites to compare the interest rates on personal loans. This is the most effective way to find the best personal loan interest rate.
Be Prepared to Negotiate
You do not have to settle down on whatever is offered by the loan providers. Sometimes, smart negotiation can help you win a profitable interest rate. Negotiation is easy if the bank officials know you or if you already have an existing account in the bank. However, negotiations should not turn into quarrels, and mutual decency must be maintained from both ends. You can also write a formal letter to the loan officials as a request application for lowering the interest rate for your personal loan.
How Credit Score Plays a Part in Getting Low-Interest Rate?
The following table will help you to understand the importance of a high credit score:
| CIBIL Ratings | Credit Score | Personal Loan Interest Rate Assumptions |
| Poor | <600 | The chances of getting a personal loan are low. |
| Average | 600 to 750 | You might get the loan but the interest rate will be high. |
| Good | >750 | You will get the loan with a satisfactory interest rate. |
| Excellent | 800 to 900 | You are eligible for personal loans with the lowest interest rate. The loan amount can be higher with the quickest approval. |
On What Factors do Personal Loan Interest Rates Depend?
Monthly/Annual Income
You must provide your current income documents to the bank for a personal loan. The greater the income, the lower will be the interest rates, and vice versa.
Income Source
The source of your income primarily matters to get the best personal rate. If you work in a reputed organization with a stable income, the interest rates are likely to be lower.
Employment Nature
Interest rates differ on your employment nature, whether you are salaried or self-employed. Whatever your income type, it must be steady, trustworthy and appropriate.
Age
Age plays a crucial role as far as low-interest rates are concerned. If you are aged below 40, you can expect a lower personal loan interest rate. Personal loan interest rates are generally high for applicants nearing their retirement age. Therefore, if all the other factors affecting the interest rate are on your side, do not wait any longer to get a personal loan if required.
Your Relationship with the Loan Providers
A good reputation as an existing financial institution or bank customer or maintaining a courteous relationship with the officials might help you obtain a personal loan at lower interest rates. However, this is just a possibility.
Conclusion
So, these are the ways to find the best personal loan interest rate and the factors on which it depends. A personal loan with a low-interest rate can bring considerable benefits to fulfilling a financial requirement.
All the different banks in India offer different interest rates for their loan. Go through their entire policy before choosing the best plan for you. Some highly trusted and reputable private financial companies, like Piramal, offer personal loan interest rates as low as 12.99% p.a. Do remember the apparent fact that the lower the interest rate, the lower the will be your burden regarding the waving off of the loan.