Approximately 77% of the working population in the country takes assistance from personal loans to meet their financial needs. Moreover, 41% of them refer to interest rates as the most crucial criteria for choosing a lender.
So, if you are a potential borrower, you must be mindful of the factors to avail low-interest rates and ensure instant approval. If you plan to personal loan apply, follow these tips below to avail the most competitive interest rates.
Tips to avail of a personal loan at a low-interest rate
Being an unsecured credit variant, personal loans are convenient and easy to avail. It helps deal with financial requirements because of its no-end use restrictions. Without any requirement of collateral, the credit is released with minimum documentation. Although personal loans extend multiple benefits, however, many factors influence personal loan interest rates.
Here are some of the tips that one should keep in mind before planning to apply for a personal loan:
Tip 1: Compare interest rates offered by lenders
Before applying for a personal loan, in-depth research will allow individuals to avail the most affordable credit. For doing this, individuals need to compare lenders in the market to determine the most competitive interest rates and features.
Besides, you can also avail a small personal loan from leading financial institutions to meet your urgent financial requirements. You need to check your eligibility and apply for this loan online to ensure receiving the loan amount as early as possible.
Tip 2: Maintain a healthy credit score
A borrower’s credit or CIBIL score represents their creditworthiness. Since personal loans are unsecured credits, it is essential to maintain a decent credit score to substantiate your creditworthiness. With a good credit score of 750 and above, you can negotiate with the lender for better interest rates.
Is your CIBIL score getting down? If yes, then you must follow the financial practices listed below:
- Clear dues timely
- Avoid applying for multiple credits
- Maintain a healthy balance between secured and unsecured credit
- Monitor your CIBIL score
Tip 3: Choose a shorter tenor
Some financial institutions extend short-term loans at affordable interest rates due to less risk. So, if you are applying for a personal loan, it is wise to opt for a shorter tenor as you have to pay interest for a shorter period. However, one must also consider EMI and loan amount before deciding.
Individuals can use an interest calculator to determine a suitable tenor and manage repayment accordingly to streamline and simplify the process.
Tip 4: Check the interest calculation process
It is always recommended to check the method of interest calculation used by a certain lender when applying for a personal loan. Often credits are offered at affordable interest rates, but you may end up paying a substantial interest amount at the end of the tenor. Usually, lenders offer loans at a fixed or reduced interest rate.
In the case of a fixed interest rate, the interest amount is evaluated based on the entire principal amount throughout the tenor. On the other hand, interest is calculated only on the outstanding principal. Therefore, when you apply for a personal loan at a reduced interest rate, it could cost you less than obtaining the credit at a flat interest rate and vice versa.
Tip 5: Good employment history
An individual with a stable and healthy employment history will not only improve your loan eligibility but also allows them to avail of an affordable interest rate on a personal loan. Often lenders require 3 years of employment history of the applicant. Individuals employed in a reputed public or private organisation are often extended personal loans at favourable terms and attractive interest rates. This is because lenders are assured of these applicants because of their stable employment and are less likely to default their credit.
While these are some of the ways to get the best personal loan it can take you a long way to avail yourself of a personal loan at an affordable interest rate and alleviate the overall debt burden in the long term.
However, for more convenience, some leading financial institutions provide dedicated personal loan applications that take less time in loan processing and provide hassle-free instant loan amounts. Therefore, you can apply your preferred loan amount through the personal loan app and ensure a smooth borrowing experience.
Apart from these, leading financial institutions also extend pre-approved offers on a wide array of loan products such as business loans, personal loans, credit cards etc. One of the best parts of these offers is that it ensures hassle-free documentation and streamlines the entire loaning process. Therefore, prospective borrowers can check their pre-approved offers by submitting their names and contact details.
Now that you are aware of the tips needed before you apply for a personal loan; explore various loan offers available in the market and select one that suits your requirements.
Read Also: How to Get Instant Approval on a Personal Loan