Personal Loans are by nature unsecured borrowings, which make these popular options in times of emergencies when people require immediate cash to meet expenses. This also happens to be the reason why higher interest rates are charged on such types of loans. People take personal loans for holidays, weddings, education, and various other needs including reasons such as debt consolidation. Such loans have helped people for decades to meet unexpected expenses and tide over bad times.
If you plan to take a personal loan, plan your expenditure carefully after reviewing your monthly obligations and income. New developments in technology have certainly made getting a personal loan faster and easier, but this has not assured a low rate of interest, since the lender decides interest rates after considering certain fixed parameters. Below are discussed a few such parameters, and ways how you can avail a personal loan at a low interest rate to ensure smooth cash flows in your day-to-day life.
Maintain a Good Credit Score
A good credit score portrays a person who practices good fiscal discipline. Expressed as a three-digit number from 300 to 900, a credit score describes the person’s creditworthiness. To be a creditworthy person, you must have a good credit report, which depicts timely repayment of loans, low outstanding loan balances, good credit utilization ratio, and a prudent debt to income ratio. Should your credit report fulfil all these conditions, your credit score will inadvertently be high. This in turn would entitle you to better and lower rates of interest on your personal loans. Thus, a higher credit score makes way for you to negotiate a better rate of interest.
Therefore, make sure you practice good fiscal discipline, repay your loans in time to ensure low outstanding loan balances, balance your credit utilization ratio, and keep a check on your debt to income ratio for lower interest rates on your personal loans.
Also Read: Are CIBIL Score and Credit Score the Same
Avoid Multiple Loan Applications
When you apply for a personal loan and face rejection, don’t make another application too fast. Enquiries, hard enquiries, and multiple loan applications are data recorded by credit information bureaus that determine your credit score. Too many hard enquiries, and multiple loan applications mean many rejections, and this reduces the confidence of the lender, who doubts your repayment abilities.
If your personal loan still finds approval, this will be at the cost of a higher interest rate to cover the higher risk portrayed by your credit score, and credit report. Avoid multiple personal loan applications for better terms and rates of interest.
Apply from a Known Lender
The bank where you receive you salary, most obviously becomes the first institution you identify when you look for a personal loan. Here, the banker obviously knows you personally, has a record of your financial status, and holds your relationship in good stead. This goodwill proves to be the deciding factor for lower interest rates.
Therefore, when you apply for a personal loan from a known lender, you have the advantage to negotiate a better rate of interest, and better terms and condition for your borrowing. Existing customers are regularly offered special discounts on interest rates. Don’t forget to enquire about such offers.
Also Read: Reasons Why Personal Loans are Rejected and How to Avoid Rejection
Compare Lenders
Look beyond your salary bank if you don’t get a good deal there. Invest some time in research and look for a lender who helps you save your money. Compare different personal loans offered by different lenders. Check and compare offerings from lenders to find the best interest rates you can avail, by paying attention to details such as loan tenures that help determine EMIs. Check your Personal Loan Eligibility at Ruloans Personal Loan Eligibility Calculator, and determine the EMI plan suitable for a lower interest rate. Comparing lenders will help you select the best lender with the best interest rate to offer.
Look for Deals and Offers
Keep a watch out for limited-period offers, which allow you access to lower interest rates. Festivals and celebration periods are such times when lender put out such offers to create goodwill amongst consumers in the market. These offerings also known as seasonal offers, and are often conveyed through SMS, emails, phone calls, and other mass media to prospective loan seekers. These are time-bound offers, which have to be availed before expiration of validity. Suit yourself!
Leverage your Professional Credentials
Your professional profile has a lot do with your personal loan approval. If you are an employee of a well-known and stable company, with a long service period, and a substantial salary, many lending institutions offer you a low rate of interest since you are considered a stable and less-risk borrower. On the other hand, if you’re not a salaried employee, but a professional such as a doctor, check with your lender for exclusive offers for doctors. Some institutions have special offerings for professionals such as doctors, and others.
Talk to a Ruloans representative to advise you on matters of how to avail a better rate of interest for your Personal Loan on 1800 2667576 , for much more than money!
