Personal loans help manage urgent financial needs efficiently. Because of its easy accessibility, collateral-free applications, minimal documentation requirements, instant disbursals, and no end-use restrictions, borrowing a personal loan is easier than ever.
But the most important thing is to obtain a personal loan at the best interest rate. A lower individual loan rate will result in lower overall interest, bringing down your total liability, increasing your repayment capacity, and helping you manage your debt effectively.
Securing a low-interest rate is not always easy as lenders consider multiple factors, including the loan applicant’s credit score, job profile, monthly income, and employment history, before sanctioning a personal loan. Here are a few things you, as a borrower, can do to get the lowest interest rates possible.
1. Choose the right lender
Each lender sets specific personal loan eligibility criteria that borrowers need to fulfill to receive instant loan approval. Check out different lenders and choose one with easy-to-meet benchmarks and affordable interest rates. Many tools are available online, such as a personal loan EMI calculator, to compare other loan offers and calculate Equated Monthly Instalment (EMI) payout for each loan. Moreover, you can check lenders’ websites to find their latest personal loan interest rates and additional costs like foreclosure charges, processing fees, etc.
2. Apply for the right amount
Before taking out a loan, figure out how much you need to borrow and your ability to repay monthly. Here also, you can use the personal loan EMI calculator most lenders offer on their websites. This online tool can help you estimate your monthly repayments and see how different loan amounts and interest rates affect your overall costs. Just enter the required loan amount, interest rate, and repayment tenure. Based on the results, choose the appropriate loan amount with the lowest EMI value.
3. Use your professional network
You can also utilize your company’s reputation or employment status to negotiate a lower personal loan interest rate. Several reputed companies have good connections with lending institutions. And if your company is one of them, the lender may offer you favorable personal loan terms since the lender gains assurance that you have sufficient financial means to make timely payments.
4. Maintain a clean record of repayment history
Your repayment history records how you have handled previous debts and loans. So, if you have any pending credit card bills, try to pay them in full. Clear off your debts monthly to avoid any unpaid balances. Also, if you have any existing loans, pay the EMIs on time, as late payments can impact your credit score. A clean credit history shows the lenders that you are a responsible borrower who can be trusted to make timely personal loan repayments. You may also get better interest rates.
Besides the tips mentioned above and practices, it is also important to maintain a healthy credit score, look out for seasonal offers, show all your income sources, have a good employment history, and research your options carefully. Once done, you can confidently click on the personal loan application button.