- June 6, 2020
- Posted by: Ganeshcbani
- Category: Blog
Top 5 factors impacting the interest rates on personal loans
Income! Banks assume that the chances of paying are better than the normal salary if your income is above a certain amount. Most banks have income levels where the rates are different.
If your monthly income increases, your personal loan would have a lower interest rate. Clients with revenues between Rs . 20,000 to Rs . 50,000 and Rs. 50,000 to Rs. 75,000 are specified levels. If you have income above Rs. 75,000 on the other hand, you will get lower interest rates.
Status of Company
Banks define 3-4 categories of companies, namely
Cat A or Elite or Top 500
Cat B Cat
Anyone who works in these companies can take a banks personal loan. The better your company category, the lower the interest rate you get. Banks classify these companies as large and reputable
Banks give CAT A company customers a lower interest rate as they are less likely to default. Thus, if your business (startups) is new and not listed in banks, you would possibly have a higher rate or no bank loan.
Credit and Payment History
Before issuing personal loans, CIBIL scores / rate must be followed by banks. If your payments for credit cards and loans are not up to date, you have a possibility of being rejected by the bank or a higher interest rate. CIBIL SCORE is in the range of 0-900 for a personal loan and many banking companies favor customers above 750. If your Cibil score is greater than 800, you can reduce your personal interest rate by 0.25 percent.
Relationship with your bank
The bank where you have a Saving account is likely to give you some preferential interest rate or personal loan processing fees. Banks ensure that their personal loan and credit card clients have better options than other banks. Test your own bank interest rate before you apply for a personal loan to other banks.
Negotiating skills for individuals
With this knowledge in mind, you can also negotiate and ask banks for special provisions for interest rates, transaction charges, etc.
Self-employed customer factors on personal loan interest rates: Interest rates
Yearly Revenue Tax Return
If your revenue is high and you are a large company, you can expect a lower rate for you.
Type of business
Banks are ready to give low prices to sound business. In order to improve the interest rates on personal loans to all manufacturers and sound business professionals.
Unique rates for Self-Employees
Banks want to finance doctors / engineers / CA and architects, since they believe that consumer classes are rarely normal and so prices are higher.
How to get the lowest personal loan interest rate?
Your credit value is one of the most important things to look for when applying for a personal loan. Find your loan score. If the score is under 600, your request for a loan will be rejected. Make sure it’s 750 or more. A higher loan score might help you negotiate a lower interest rate with the lender.
The second thing that matters most is to negotiate with your lender. The interest offered by the lender must not be quietly accepted, particularly if you have a good credit score or are an existing customer. Negotiate your way to leverage these points and ask for a lower rate.
Make sure your credit is kept. Pay your credit card bills and loans on time. Compare the interest rates and bids from different banks before you decide on the bank. Choose an offer that meets your requirements best. You may not have to go at the lowest interest rate. You can also select a loan that has a longer term or zero processing fee or a bank that allows you to close a credit account without charging a closing penalty.
Like gadgets, there are also loan offers during the holiday season. Look for special offers, like low interest rates, zero processing fees, etc. Banks also sometimes offer to waive the last EMI.
Check the process of measuring interest
It may happen that, although a lender gives you a low interest rate personal loan, at the end of the loan, you may end up paying higher interest rates. This is because the measurement method of the total interest payable will differ between the lenders. Therefore, you should also consider the process of determining the interest due when using a personal loan.
The lender may provide you with a loan at a fixed rate or at a reduction in the rate of interest. In the case of a flat interest rate, interest payments are calculated on the full loan amount during their entire term of office. However, the interest payment in the case of a reduction in the interest rate is calculated on the remaining principal, where the principal is gradually reduced by EMIs. By using a personal loan at a flat interest rate, you can cost more than using a personal loan at a reduced rate.