A personal loan is a great way to arrange for funds that one might require in times of need. This loan can be used for any expense as lenders do not place any restrictions on the loan amount’s end usage. Now, before applying for a personal loan, a borrower needs to first make sure that the loan is affordable. This involves finding a lender that is offering an affordable interest rate on the personal loan. Before applying for a personal loan, an applicant should be aware of the ways in which they can get a lower personal loan rate.
Listed below are a few tips that can help an applicant in getting lower interest rates on their personal loan:
- Repay all the existing loan EMIs on time
If an applicant does not have a clear record of clearing their debt on time, they become a risk for any lender. This is why even if they get approved for a loan, it is quite possible for them to be stuck with a high personal loan interest rate. To get a good interest rate, it is advisable to clear off all previous loans on time without any delays.
- Maintain a healthy credit score
Any lender reviews an applicant’s credit score before giving them a loan. An applicant with a bad credit score has the risk of getting their application rejected. Even if they do get approved for one, the loan is likely going to have a high interest rate. Since lenders prefer that their borrowers maintain a credit score, they are more likely to offer a lower interest rate to those with a healthy credit record.
- Build a relationship with the lender
If an applicant already has a bank account with the lender, it can improve their chances of getting a good deal. This is because since the lender knows that the applicant already has an existing relationship with them, they can agree to offer a good deal on the interest rate of the personal loan. If the applicant is still unsure about getting a loan, they can always use the lender’s personal loan eligibility calculator to find out about the loan amount that they can get.
- Focus on improving professional credentials
A financial institution would find it easier to give a loan to someone who has a steady monthly income as compared to someone with an irregular source of income. Applicants who work for reputed organisations and earn a good monthly income are more likely to get offered a lower personal loan interest rate.
After going through these tips, a borrower can improve their chances of lowering the interest rate of their personal loan. Do note that it is important to use a personal loan EMI calculator to understand the loan’s EMI payments. Based on the results that the calculator displays, a borrower can decide whether to go ahead with the loan or look for one with a better personal loan rate.