A personal loan is one of the best options to satiate an immediate financial need. This need can range from anything, buying a personal gadget, getting married, getting a house renovated or clearing bills for medical expenses. These loans are essentially meted out without collateral. However, at times, these loans can get burdensome and repaying such an amount within a few months can get tough. Thus, personal loans having a long tenure and low-interest rates are mostly preferred. The lowest personal loan interest rates are offered by various banks and NBFCs, provided you are an eligible borrower and capable of repaying the loan accurately. Some ways to get a personal loan with low-interest rates are:
Employment at a reputed organisation
Borrowers with a stable source of income are always preferred over those who do not have such a source. This is because lenders can rely on these borrowers for the timely repayment of the loans. If a borrower is taking a loan of a hefty amount, he or she will be liable to provide the details of their working organisation as well as their other sources of income, if any. These sources might be rents, investments, etc. The employment and income history play important roles in determining your eligibility as a reliable borrower. The lenders tend to check these details and often go for a discreet or official verification from the employer or the organisation itself. Thus, the background of your employment plays a vital role in deciding your fate of bagging a personal loan with a light interest rate.
Go for the lender with whom you have prior experience
Since personal loans are without collateral at stake, it is always a wise option to borrow from a lender with whom you have prior experience. Such a lender might help you in getting the lowest interest rate personal loan. Further, lenders tend to be lenient in case of interest rates when it comes to their existing as well as trusted customers. Further, they might also let you avail good offers and discounts, provided they have had a commendable experience of credibility as a borrower. Known lenders can also be beneficial if, in some rare cases, a borrower is lacking enough finances to pay back the borrowed amount. There have been previous instances of extending the tenure only to accommodate the borrower’s financial insecurities until he becomes capable of repaying the amount.
Go for seasonal deals and offers
Most lending organisations like banks and NBFCs launch seasonal deals and bonuses in case of personal loans. As the name suggests, these deals are available only for a limited period and thus, are highly cost-effective. Offers and deals on loans are available mostly during the summers or the general holiday seasons, for those are the times people require to be financially well off. Going for these offers might also make you land upon a loan scheme that would otherwise have been heavy on your pockets.
Maintain a good CIBIL score
A CIBIL score of 700 os needed for availing of a personal loan of a hefty amount. CIBIL score is a major deciding factor when it comes to your eligibility as a borrower. This score reflects how your past behaviour has been with the same or different lenders, alongside the loan repayment capacity. Since personal loans do not involve collateral as such, lenders, especially officially authorised, tend to have the borrower’s CIBIL reports checked before sanctioning the approval. Involving collateral which might be ornaments or your property provide the lenders with a sturdy foundation to rely on. However, an absence of the same makes it vital for them to take some sort of security into account.
Consider a short-tenure loan
Lenders are often more comfortable with loans that have a short tenure than those that have long ones. The interest rates associated with short term loans are essentially lower than those with long tenures. However, a long-term loan might go easy on your pockets but as it is, the instalments will have to be paid after taking the interest into account. You will have to consider both the options as paying higher amounts at short intervals can also become a bit tedious in your pockets. However, the lowest personal loan interest rates are mostly the ones applicable for short term loans.
Understanding the method of interest calculation
Since we are talking about high and low-interest rates here, it is quite important to understand the fundamentals of interest calculation. While lower interest rates might be attractive, most lenders calculate and present an amount that does not take into account the principle. Thus, understanding every bit of the calculation is extremely necessary to avoid the hassles of extra payment later on in the tenure.
These are some of the things you might take into consideration while applying for personal loans. Personal loans come in handy for a variety of situations. These can be anything from homely needs to personal wants, from school fees to medical emergencies. Lower interest rates make it convenient for a borrower to repay the loan over a long tenure without causing serious weight on one’s pockets. Further, the entire issue of a personal loan sanction depends on how credible you are, as a borrower. Be it your relations with the lender or your credit score, all these are representative of your past credit behaviour. Thus, it is absolutely important to maintain your credit behaviour at first. Good and reliable credit behaviour works wonders in case of loan sanctions.