Personal loans are convenient financial tools, as you can obtain them quickly and use the funds to finance a range of needs, from higher education and weddings to home renovation, purchasing a car and medical emergencies, without any hesitation. However, personal loan interest rates are usually higher as compared to other loans because they are unsecured. So, it becomes important to compare loans basis this factor to ensure that you pick the best one. You can also improve your chances of getting a personal loan at a competitive interest rate by working on a few factors, so that you can meet your myriad needs through a single loan. Read on to know more about what they are.
Improve Your Credit Score and Maintain it
Your credit score is a 3-digit number ranging from 700 to 900 and reflects your creditworthiness. Also known as your CIBIL score, this number is derived after evaluating your credit history in terms of how you have handled ongoing and past debts or dues. As lenders gauge your creditworthiness by looking at your score, having one that is 750 or more is considered to be ideal as it installs confidence in the lender about your repayment capabilities. In turn, it allows you to avail a loan quickly and enjoy attractive personal loan interest rates. Moreover, with a good score you can also negotiate the loan terms and the loan amount, if need be.
Compare Different Lenders And Calculate Your EMIs
Apart from the credit score, every lender has its own personal loan eligibility criteria. You must meet the eligibility terms as closely as possible to get a loan without any hassles. Moreover, knowing the eligibility terms in advance helps you pick the lender with simple terms. Typically, you are required to meet eligibility terms pertaining to your salary, city of residence, age, nationality, and credit history. These factors vary across lenders, so it’s best to research them in advance before you apply. You can also use an eligibility calculator to determine in seconds whether you qualify and how much you can borrow.
Once you ascertain your eligibility, use the EMI calculator to determine your EMIs beforehand. Enter the loan parameters to view your EMIs and change the values as many times as you wish to arrive at a loan structure that you’re comfortable with. This ensures that the loan fits with your budget.
Keep An Eye On Seasonal Offers
Apart from the right loan structure, to get better interest rate on your personal loan, make it a point to look for seasonal offers. Understanding your requirement for funds during the festive season, lenders introduce special loan offers during this time of the year. These seasonal or promotional offers are known to offer credit on lucrative terms and lower interest rates. You will get these offers via email or SMS, so watch out for such deals to get financing on a pre-approved basis, at a lower cost.
Show All Sources Of Income
As a personal loan is unsecured, it’s important for the lender to be confident about your ability to repay the loan. In this regard, the lender is going to pay close attention to your salary. However, your salary is just part of your income. Therefore, to get an ample sanction at a competitive personal loan interest rate, it’s important to show all sources of income. Thus, in addition to your salary, ensure that you highlight rental income or interest earnings via investments as these enhance your ability to repay the loan and make the financial institution surer that you will do so on time and in full.
Establish That Your Employment is Secure
Most lenders require you to be a part of the workforce for at least a few years before you apply. Two years is a good duration, with one year spent at your current workplace. So, if you’ve recently taken up your first job, it may be better to wait a while if possible before you apply for financing to get a good rate of interest. Moreover, note that if you work at a reputed MNC, private or public company, lenders are surer about you receiving a regular income, and hence adhering to the repayment schedule. As a result, your chances of being able to get a personal loan at a low interest rate is higher.
Keep these points in mind to get a better personal loan interest rate. For a better borrowing experience, also check the benefits offered by the loan you’re choosing and any other fees or charges that are applicable as this impacts your total cost of borrowing. One lender that has no hidden charges and provides funding of up to Rs.25 lakh is Bajaj Finserv. Furthermore, Bajaj Finserv’s online personal loan also offers quick disbursal and has minimal documentation requirements. To view a tailor-made deal and expedite access to your loan amount, check your pre-approved offer.