A personal loan is an easy financing option with the digital presence of lending institutions. Fast and easy-to-use loan apps have especially gained a lot of traction.
Lending institutions need to consider various factors to sanction a loan as they are offering financing options without any collateral. Primary factors are the applicant’s credit history, work profile, income, and employer. Risk-based pricing of loans leads lenders to consider these factors to offer interest rates on personal loans. The better conditions of a borrower in these terms, the lower the interest rate and it is easy to get a personal loan instant approval.
Following these tips can help borrowers to avail of lower interest on a personal loan:
Maintain a Good Credit Score
Loan applications with a high credit score of 750+ can get finance against a personal loan easily. Lenders prefer applicants who have maintained a high credit score to approve a personal loan and carry lower credit risk for lenders. Such applicants are considered more disciplined in repaying their debts. Lending institutions can consider offering preferential interest rates if you have maintained a high credit score.
Healthy credit practices, keeping the credit utilisation ratio low, ideally, 30%, monitoring co-signed loans and avoiding multiple loan applications at the same time help to maintain a strong credit history and lower personal loan rates.
It will be helpful to make corrective actions for an accurate credit report. Review your credit report at regular intervals. If you find any wrong information or clerical error in the report, you will have sufficient time to rectify them and improve your credit score with the right information. A rectified credit report automatically increases the credit score. Once a year, credit bureaus can provide a free credit report to loan seekers.
Maintain a Good Relationship with Your Existing Lenders
While looking for a personal loan, an individual should first inquire about the personal loans with lending institutions with which they have existing customer relationships. Such customer relationships can be in the form of holding current or savings or salary accounts, deposit accounts, credit cards, or ongoing loans.
Numerous lenders offer financing options at preferential interest rates to existing consumers. It means you can get a loan at an interest rate below the prevailing money market on the day of loan approval. Therefore, while searching for the best personal loans, your search should start by first approaching the existing lenders with whom you share an existing lending relationship. Make timely EMI and credit card bill payments to maintain a good relationship with your lenders.
Interest Rate Comparison
In today’s world, where the financial market is digitised, individuals can compare loan interest rates easily. Do proper research before finalising the lender. However, while comparing various personal loans, the interest rate is not the only factor to consider. It is inevitable to evaluate other loan features also. Look at the processing fee, prepayment charges, loan tenure, and loan amount before submitting a loan application. You can also compare loans with the interest rates offered by your existing lenders. Interest rates and other features of personal loans can be used as a benchmark to compare other personal loans.
Attractive Features of Personal Loans
Attractive Features of personal loans that a borrower can look for are as follows:
- Loans up to Rs.25 Lakhs
Consider a lender offering a high loan amount as high as Rs.25 Lakhs. The amount you are eligible for depends on the applicant’s age, income, ongoing financial commitments, etc.
- Completely Paperless Process
A lender offering personal loans following a 100% paperless procedure brings more ease to borrowers. It is a quick process to get instant money in the hour of need.
- Flexible Loan Tenure and Attractive Interest Rates
You can look for a lender offering an interest rate as low as 11.99% for salaried and self-employed.
- Fast Disbursal
After all checks of submitted documents and details for a personal loan, the lender can credit the loan amount to your bank account within 30 minutes. Find a lender with a fast disbursal process.
- Additional benefits
Go with a lender offering additional benefits to their existing customers. It can be in the form of reduced interest rates or other easy norms.
Conclusion
Personal loan interest rates may vary widely, ranging between 10% and 24% per annum. Credit evaluation processes with different lenders may vary and, therefore, interest rates. Keep your loan approval chances high with good credit history. You can look at reputed NBFC’s personal loans for quick loan processing and lower interest rates in the market.
