No end use limitation, collateral-free nature, and wide availability all this makes personal loans the most popular financial instrument when it comes to dealing with the temporary & sudden financial crisis.
Since personal loans have gained so much popularity in the last few decades, there is a wide market for it. From nationalized banks to NBFCs and DSAs all are offering personal loans promising the best service and lowest rates. However, lenders are doing their part but, seeing the competition in the lenders’ borrowers needs to be extra careful while applying for a personal loan.
Here are some tips to secure the best personal loan on lower interest rates.
Maintain a good CIBIL
A credit score of +750 is commonly viewed as a decent score. Having a decent credit score increases your chances to get approved for new credit and it additionally empowers you to get approved for the desired loan amount for an ideal tenure and most importantly at reasonable rates.
All this depends on your CIBIL as- your CIBIL is the reflection of your financial health. It reflects all your borrowings and repayment made towards them. Hence the individuals with a good CIBIL rating are considered more creditworthy and can get a loan at a lower interest rate as compared to the one who has a CIBIL below 700. So, you want your personal loan to be approved at a lower interest rate then you need to maintain a good credit score.
Compare for the interest rate with different lenders
The interest rate is something on which your borrowing cost depends. Since there are so many lenders offering personal loans, it becomes your responsibility to compare among the lenders and get the loan from the one who is offering it at the lowest interest rate.
To make the comparison, it is always a good idea to visit an online financial marketplace and compare the different offers. This will help you secure the best deal and you may get some offers too.
Check the method of interest calculation
Indeed, everyone who opts for a personal loan is not aware of this, but it’s quite important to check the method used by the lender to calculate the interest payable on your personal loans.
The loan may be offered at a lower rate of interest but you may end up paying more at the end of the tenure. This is because most lenders offer loans either at the flat interest rate or at reducing the interest rate.
Let’s understand both one by one. In cases where lenders charge a flat interest rate, interest is calculated on the entire principal throughout the loan tenure. Whereas, in reducing rates, the interest is calculated only on the outstanding principal amount. Hence when your lender provides you a personal loan at a flat interest rate you end up paying much more.
Having a fixed income with employment stability
The most important thing which lenders look for while lending is the repayment capability of the borrower.
Having a fixed source of income and job stability surely adds up a plus point to the borrowers. On the same hand, this can also help them to get the loan approved at lower rates as lenders are sure about the repayment.
Other Parameters to be checked
It’s not only the interest rate that determines your total borrowing cost.
But it is a combination of interest rate, processing fees, taxes like GST which contributes to your total borrowing cost. In the race of getting the lowest interest rate for a personal loan most of the borrowers forget to consider the other aspects which can increase their cost.
When applying for a personal loan, it is always important to consider processing charges and applicable taxes. In addition to this, the borrowers should also check for hidden charges. Checking out for special offers can also help to get a lower interest rate for your personal loan.
Well, these tips are simple and can surely help you get your personal loan at the lower interest rate, and hence can reduce your debt burned.