Ways By Which You Can Secure A Low Personal Interest Rate Loan
Are you looking for a personal loan? Do you want to secure a low-interest rate on a personal loan? In this article, you will find ways to attract a low-interest rate on a personal loan.
Good credit score: A credit score describes a user’s creditworthiness. A credit score is based on a user’s credit records like the number of accounts, total debt, repayment history, timely payments and various other factors. The higher the score, the better, as it will help in securing a low-interest rate. Lenders use these scores to estimate the probability that an individual will repay a loan. Let us look at the ranges of credit score:
- Excellent implies 800 to 850
- Very Good implies 740 to 799
- Good implies 670 to 739
- Fair implies 580 to 669
- Poor implies 300 to 579
Advice to get the best credit score before applying for a loan:
- Evaluate your credit report for errors; if you find any errors, rectify them as soon as possible.
- Minimum Outstanding Dues and a credit utilisation ratio of 30% or lower.
Compare interest rates of lenders: There are many banking and non-banking financial institutions that provide a low interest rate on a personal loan. One can choose which suits them best. Top banks providing the lowest personal loan interest rate are State Bank of India, Bank of India, Citi Bank, UCO Bank, Indian Bank, Central Bank of India. It is so important to research and compare all interest rates and other benefits of personal loans offered by banks. This will take some time, but you will be able to make the right decision. One can check the eligibility and apply for a personal loan online.
Seasonal offers: During festive seasons, banks offer special offers to their customers via email and SMS. Customers need to keep looking for the lowest personal loan interest rate offers. These offers are for a limited time, and most probably, banks offer discounts when customers apply for a personal loan online.
Borrow for a short period: Banks view loans with longer terms as riskier. In the long term, there’s a chance something could go incorrect during that period. To keep the interest rates more affordable, keep your repayment period as short as possible, including the monthly payments. This will way one can save money on interest by scoring you a lower rate and by allowing you to pay it back in a short interval of time.
Borrow within limited amount only: In the bank’s point of view, a small loan is less risky than a huge amount of loan. Borrowing a specific required amount will save you from high interest. It is better if customers apply for loans that come under the eligible amount for them. Applying for an amount greater than your eligibility may lead to rejection of the loan application. Always check eligibility of personal loan and apply personal loan online.
Employment Type: Employees working with reputed companies, multinational companies etc., may be able to get some favourable deals. This is because the employers’ ability to give a steady job is higher; therefore, banks expect that the borrower to have a stable income and repay the loan within the given time period. Job and residential stability and sustaining a good FOIR (Fixed Obligation to Income Ratio) ease in building a good credit score which impacts the interest rates. Many times before sanctioning of loan, the bank requires you to have an employment history of at least two years, including one year with your current employer. Banking and financial institutions look for borrowers employed with the state or central government, PSUs or quasi-government organisations, which shows in the interest rates offered as well.
Avoid multiple bank application: Simultaneous loan applications can hurt your credit score and decrease the chances of getting a loan as multiple loan applications may appear in your CIBIL Report.
Prior relationship with the bank: If you are an existing customer in a bank, check for personal loan eligibility and apply for a personal loan. Having a prior relationship with the bank may help you in locking a low-interest rate on a personal loan. You can negotiate with the bank representatives; bank representatives know you and trust you that helps in getting a flat rate to secure a personal loan. On the other hand, if you don’t know the bank, you have to research the bank separately, and bank representatives may not trust you at a glance.
These are some of the ways with which you can secure a personal loan with a low-interest rate. Customers need to keep a look at interest rates, loan term, repayment options, calculation of interest, other benefits to getting the best loan for oneself.