A personal loan has emerged as the most preferred debt instrument in recent times. This surge in the popularity of personal loans can be attributed to the ease of financing offered by a loan app. Today, you can avail instant loan at the click of a few buttons. Be it buying a new home appliance or financing your wedding expenses, covering a medical emergency or fulfilling your aspirational needs, a personal loan can come to your aid. But before you apply for a loan, you must consider its most crucial aspect – the interest rate.
The interest rate on your personal loan is one single factor that determines the overall affordability of your loan. It also influences your monthly EMI and impacts your selection of loan tenure. Thus, before availing an instant loan though a loan app, you must know these tips that can help you in securing the lowest interest rate.
Best Tips to Obtain Personal Loan at Low-Interest Rate
Compare different lenders to choose the best
To avail a personal loan at the lowest interest rate, you must compare the loan offers from different lenders. Though most of the terms of these personal loans offered by the lenders are same, their interest rates might differ based on several parameters. For instance, you might find lower rate of interest in a personal loan app. This is because of the low operational costs of Fintech companies as compared to conventional lenders.
Download a loan app and browse through the instant loan offers. Compare the interest rates and different terms of the loan. Once you have narrowed down your list, check your eligibility and go for the lender that offers best customer service and customized loan offers.
Maintain a high Credit Score
Your credit score plays a significant role not only in approving your loan but also in determining your interest rate for the loan. You can get a low rate of interest on a loan if you have a high credit score. Lenders consider a high credit score as a reflection of high creditworthiness. That means you are more likely to repay your loan and interest on time.
You may bargain with the lender and receive the best personal loan interest rates by maintaining a good credit score. Not only that you can also get quick approval on loans if you have a strong credit score.
Add a co-applicant to your loan application
Having a co-applicant not only helps you get your loan approved but you may also negotiate with your lender for better interest rates. This is because when you add an eligible co-applicant to your applicant, the lender’s risk is diversified. Both the applicant and the co-applicant are equally liable to repay the loan. Since, the risk is reduced; the lender is open to offer you the loan at better interest rates.
While adding a co-applicant to your loan application, make sure to check their credit score. Your co-applicant must have a stable source of income and a high credit score. The higher their income is, the better it is for you.
Go for a secured personal loan
If you are finding it hard to get a personal loan at lower interest rate, then you might consider pledging your asset against the loan. You can pledge your investments, property, vehicle or jewellery against the loan.
Since a secured loan gives the lender an assurance of recovery, they are more likely to offer you a better interest rate. This is a great option, if you are applying for a short-term loan. Avail the loan at lower interest rate and free your assets by repaying the loan quickly.
Avail the Benefit of Seasonal Discounts
Lenders often offer promotions and deals on personal loans during the festive season. These deals provide borrowers with cost-efficient terms and lower interest rates. These deals are often presented for a relatively brief time on special occasions or holidays.
You must check the loan app for such offers. These offers are also advertised on the lender’s website. In addition to that, you can also visit the lender’s office, and discuss the loan offers.
Check with your previous lenders
Applying for a personal loan with a previous lender can also get you some great perks including lower interest rates. You can also consider the financial institute where you hold your loan account. However, for this, you must have made all your EMI payments on time.
If the lender is familiar with your profile and they know that you are a responsible borrower, then they may offer you pre-approved loans at lower interest rates. They may also waive off your processing fees and other fees associated with the loan. In addition to this, the entire loan process becomes much simpler when you avail a loan from a previous lender, as they already have your details.
Maintain a History of Consistent Employment
Since personal loans are unsecured loans, lenders evaluate your reliability based on your income, job history, and employment status. As a result, you must keep up a good employment history.
You must work for a reputable company because this might indicate employment and financial security. A good employment history indicates that you have a stable job and income and are capable enough to make regular payments against your loan.
Conclusion
Whether you want to host a grand wedding, renovate your home, or make a big purchase, a personal loan can be very beneficial for you. But before availing the instant loan, you must do your research and spare some time to find the best possible interest rate.
Download a loan app and compare the different loan offers offered by various lenders. You must also use the loan EMI calculator available on the app to calculate your monthly EMI liability and preplan your loan repayment by considering all the factors. Remember that a personal loan is a big financial liability that will affect your monthly budget for months. So, analyze your needs, consider your finances, calculate your loan affordablity and only then apply for the personal loan.
