How to Get Lowest Interest Rate on Personal Loan?

How to Get <a href="https://paydayloansohio.net/cities/martins-ferry/">payday loans in Martins Ferry</a> Lowest Interest Rate on Personal Loan?

Current Interest Rate on Personal Loans

If you are looking to apply for a personal loan, here are a few tips that will help you avail a lower rate of interest:

  • Improve Your Credit Score: A high credit score indicates that you are creditworthy. Banks and financial institutions offers lowest personal loan interest rates to applicants who have a high credit score. Thus, you should check your credit score before applying for a personal loan. If your credit score is lesser than 750, you should look for ways to improve it. There are more chances of you getting a personal loan at a low interest if your credit score is over 750.
  • Avoid Missing Repayments: If you miss a loan or credit card repayment, your credit score may be adversely affected. Loan providers usually take your repayment history into account before deciding the personal loan interest rates. Those who have paid their past EMIs and credit card bills on time are likely to be charged a lower interest.
  • Keep an Eye Out for Offers: Banks and financial institutions usually offer special interest rates for a limited period of time during festive occasions. If you apply for a loan while such an offer is running, you may be offered a lower rate of interest.
  • Compare Interest Rates: Before applying to a particular bank for a personal loan, it is necessary to compare the personal loan interest rates charged by various NBFCs and banks. This will help you avail a personal loan at a competitive interest rate.
  • Negotiate with the Lender: If you are an existing customer of a bank or have a good relationship with the loan provider, you can negotiate for a lowest interest rate. When doing this, it is advisable to submit a formal written request to the loan provider.

Among the various points that are mentioned above, the credit score of an applicant is one of the primary factors that is taken into account by banks and financial institutions to decide the interest rate. Make sure to check your credit score at the earliest to ensure that you are offered a favorable interest rate.

Factors that Affect Personal Loan Interest Rates

  • Income: Loan providers take the applicant’s income into account when deciding the interest rate. Individuals who have a high income pose a lower risk to the bank and, thus, might be offered a lower interest rate. On the other hand, those with lower annual incomes may have to pay a higher interest rate.
  • Employer Details: If you work for a reputed organisation, the bank/financial institution is more likely to offer you a lower rate of interest.
  • Nature of the Employment: Loan providers may offer different interest rates to applicants based on whether they are self-employed or salaried.
  • Age: The age of the applicant can also have an impact on the interest rate quoted by the loan provider. Individuals who are nearing the retirement age may be charged a higher interest rate.
  • Relationship with the Loan Provider: Existing customers of the bank/financial institution may be offered a lower rate of interest at the time of applying for a personal loan, provided they have a good relationship with the loan provider. This is, however, at the discretion of the bank and not all existing customers will be offered a preferential interest rate.

Fixed Interest Rates vs Floating Interest Rates – Which is better?

If you opt for a personal loan with a fixed interest rate, you will be charged the same rate of interest throughout the loan repayment period.

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