The small-ticket personal loan segment has escalated threefold for disbursements and 11 times in terms of volume from FY17 to FY21. The credit option’s versatility is why individuals are falling back on it during financial exigencies.
However, borrowers must settle for the lowest interest rate on personal loans to make the borrowing affordable. Lenders generally levy interest rates based on the cost of fund and evaluation of the borrower’s credit risk. Hence, borrowers must know the intricacies of personal loan interest rates before applying for the credit advance.
Know how to avail the lowest interest rate personal loan in India
Borrowers must keep the following factors in mind to avail the lowest interest rate on personal loans in India:
Compare different lenders:
A little research can help borrowers avail of personal loans at an affordable interest rate. Different lender charges different interest rates. Therefore, before availing of a personal loan, borrowers must invest time in comparing different lenders and their offerings, helping them avail the lowest personal loan interest rate. Moreover, borrowers should also check the eligibility parameters and loan amount extended by various lenders.
Refrain from multiple loan application:
Multiple loan liabilities projects borrowers as desperate for funds which significantly lower the CIBIL score. Moreover, they have the additional burden of repaying those loan principal. As the CIBIL score plunges, borrowers are less likely to receive a lower interest rate on a personal loan.
Be judicious in choosing the loan amount:
The loan value also affects the levied interest rate. Borrowers applying for a loan amount higher than the amount they are eligible for will lead to rejection of the loan application, or the lender will charge a higher interest rate on the loan principal.
Keep a healthy credit score:
The interest rate levied on borrowers is based on borrowers’ credit scores. A credit score determines a borrower’s repayment capability. A borrower with credit score of 750 and above is considered a low-risk borrower and is offered a nominal interest rate. However, those with a subpar CIBIL score must know how to improve personal credit score, which will help them fetch lower interest rates.
Negotiate with lender:
Existing borrowers can negotiate with the lender to reduce the interest rate. However, borrowers must go ahead with such negotiation by submitting a written request.
Use professional credentials:
Borrower’s profile has a lot to do with the personal loan application. Borrowers with a stable source of income will be offered a lower interest rate. Moreover, applicants working in a reputed MNC also can avail the lowest interest rate on personal loans due to higher job security.
Make repayment on time:
Failing to repay the loan or credit card repayment will bring down the credit score. Lenders scrutinise borrowers’ repayment history before deciding on the loan amount and charging an interest rate. Hence, borrowers with a decent repayment history are likely to avail of a personal loan with nominal interest rates. In this regard, borrowers must know how to plan personal loan EMI repayment better, helping them avail of lower interest rates.
Keep a check over seasonal offers:
Financial institutions extend special interest rates during special occasions. If borrowers apply for a personal loan during such deals, he or she will be able to reap the benefits of competitive interest rates. Borrowers need to keep regular updates on these offers to make the borrowing cost-effective. Moreover, these offers are short-lived. Hence, borrowers need to opt for such offers till the time it is valid.
Besides knowing the factors that will lower the personal loan interest rate, borrowers should know everything about the fees and charges applicable to personal loans.
On receiving the lowest interest rate on a personal loan, borrowers can conveniently apply for it and receive instant access to funds.
Know how to apply for a personal loan
Here are the steps that will help borrowers apply for a personal loan online:
Step 1: Go to the official website of the preferred lender and select personal loan from the product page
Step 2: Now click on ‘Apply Now’ and fill in the online application form
Step 3: Select the desired loan amount and click on submit to complete the procedure
Furthermore, to make borrowing hassle-free and affordable, individuals can check out the specially-tailored pre-approved. These offers are extended by several financial institutions on products like personal loans, business loans, credit cards, etc. These offers expedite the lending process and save turnaround time. Willing borrowers can check their pre-approved offers by submitting their names and contact details.
To sum up, availing the lowest interest on rate personal loans minimises the loan expenditure, helping borrowers manage other financial liabilities efficiently and eliminating monetary burden throughout the repayment tenor. Moreover, nominal interest rates help borrowers pay monthly instalments comfortably.
