Personal loans are becoming increasingly popular nowadays due to the sheer convenience of availing them. Many online lending platforms facilitate personal loans with bare minimum documentation without any collateral. In addition, instant personal loans have quick disbursal periods, making them apt for financing emergencies.
If you are looking for a personal loan, you can check options such as Fullerton India’s instant personal loan offering competitive interest rates and flexible repayment periods. You can use the funds to finance any immediate expense like wedding arrangements, loan consolidation, medical treatment charges, buying gadgets, etc., without any restrictions from the lender.
The main point of focus then remains the affordability of a personal loan, which depends on the interest rate. The interest that you will need to pay on your loan determines the way forward, along with the monthly EMIs for you. It is always better to put some effort and ensure the suitability of interest rates as per your financial situation.
Here are 5 tips to get the best personal loan interest rate in India.
Keep Your Credit Score Healthy
Your credit score is one of the most significant indicators of your repayment capacity and creditworthiness, as it shows your history with credit extensions. A few lenders may accept a credit score of over 750 and above. However, to get the lowest possible interest rate, you must have a high credit score, above 750 and as close to 900 as possible. Having a good credit score and history makes the lenders trust you to repay the loan without defaulting, and they offer you the best personal loan interest rates. You can keep improving your credit history and score by ensuring timely re-payments on any loans or credit cards you have.
Build a Good Banking Relationship
Having a good rapport with your lender can significantly improve your chances of getting a loan at the appropriate interest rate. If you have consistently availed of services from a particular bank with regular maintenance of your accounts and deposits, you may be considered for a better interest rate. Apart from consistency with your finances, if your credit score and income are also high, the interest rates are likely to be even lower.
Good Loan Repayment Record
In addition to checking your credit score, lenders also check your loan repayment track record. It is also a significant determinant of your personal loan interest rate. If you are applying for a personal loan, ensure that you have not defaulted in repaying any loan, at least for the past 12 months. On the off chance when lenders sanction a loan to defaulters, it comes with very high-interest rates. Ensure you have a proper schedule for all your loan repayments to get the next loan at the best possible interest rate.
Use Your Credentials as a Professional
Your income is an integral part of the lender’s understanding of how capable you are of paying back the loan on time. Inadvertently, it also impacts the interest rate at which they offer you the loan. Naturally, a higher income supplemented with zero to very low existing EMIs would warrant a lower interest rate. Because it means you have a very high repayment capacity. To avail of such a benefit, you must produce due documents to prove your income, such as tax returns, bank statements, etc.
Not only is your income of relevance, the establishment or company you work for is also of significance. Lenders verify your job stability and reputation of the company to see if your income is volatile. Some lenders also have affiliations with certain renowned companies that grant their employees benefits when availing of a loan from specific lenders. Make use of these tie-ups and get the lowest possible rate of interest you can.
Compare Loan Terms of Several Lenders
Conducting your due diligence in research is essential. Look into all lending sources, such as banks, financial institutions, online lenders, and credit unions. Once you know the kind of loan you want, shortlist a few from these sources. After shortlisting, narrow it down to 2-3 lenders after comparing them. Do not apply to too many lenders since it can negatively impact your credit score. When you apply for a loan, the lender makes a hard inquiry. A large number of these hard inquiries can result in a detriment to your credit score and possible rejection of your loan application.
Personal loans are a great way of getting a hold of some funding with the benefit of flexible terms. But you can always make it better! Make sure you follow the tips mentioned above to get the lowest possible interest rate on your personal loan. Always weigh out your options and go for a lender that offers competitive interest rates, to begin with, and conditions to sustain your financial health.