- May 29, 2020
- Posted by: Ganeshcbani
- Category: Blog
In comparison to secured loans such as a home loan or car loan for which collateral is required, individual loans are non-secured loans which typically have higher interest rates. Some of the most important items before a personal loan is to make up for a lender that provides you with the lowest interest rate.
The lender must weigh a variety of factors to assess your creditworthiness before authorizing your loan. Here are some measures to consider when you want to get a lower interest rate on a personal loan
Check your loan and credit report
Financial institutions can only offer you a personal loan if the minimum credit requirements are met. With the best loans, that typically requires a credit score of at least 640, but there are borrowers who accept lower-scores customers. If you think of the best way of getting a loan, know whether you are creditworthy to decide if you are a successful candidate for a personal loan.
When you have a credit card, make sure that your lender allows you access to your accounts as an benefit. You can also check your credit score on for free.
The information in your credit report determines your credit score, so it is also necessary to review that. You can download your credit report for free from each of the three main credit reporting offices once every 12 months:
When you notice mistakes in your credit report, take prompt steps to refute your credit report mistakes.In addition to ensuring that your credit report is correct, you can do two things to boost your score after inspection.
Make sure you make payments on time
Reduce your debt, in particular the percentage of your available revolving credit (including credit cards)
Although you might not instantly see the impact, your credit score will improve over time if you practice these consistently although preventing mistakes.
Banks or financial institutions will know the repayment capabilities or financial obligations, given that they have access to your loan value. So it’s also important to understand the terms of repayment and to check whether you can afford the loan with your salary.
Although a personal loan for emergencies is recommended, please take account of the above during the personal loan process.
Compare multiple Banks or NBFC
When you want a personal loan, it is a good idea to compare deals from different lenders.
Include the following when comparing lenders:
Be vigilant about loans: some lenders offer loans that are as big as Rs.50000 and Rs. 6000000, while others are smaller.
Take a look at fees: some common fees are origination fees, processing fees, late payments and advance payments. Not all lenders incur these rates, so read the fine print to find a non-fee or inexpensive lender to save money.
Know what conditions you need: Some personal creditors offer loan terms for 7 years , making your monthly payment more manageable. You will pay more interest on a longer reimbursement period, however this drawback might be worth a lower payment.
Compare interest rates: Interest rates differ from loan to loan, and by choosing between lenders you can qualify for a much lower rate. Use offers from many lenders to make sure you have the lowest rate to see if they offer auto payment incentives for a lower cost.
Consider a co-signer: if you have a poor credit or no defined credit history, you will apply for a loan by having a co-signer. All lenders do not require you to do this, however, so check with every lender.
Decide how fast you will need the money: some lenders will take days to process and disburse the loans, while others can give you the money the next day you apply.
Watch Out For Form of Interest Calculation
You may pay for a lender when taking the Personal Loan, which offers the lowest interest rate, but you end up paying a higher interest rate at the end of your loan term. The disparity in the method of measuring the gross interest owed by the borrowers may be due to this. It is one of the most important things to look for when you take a personal loan.
Lenders typically follow two formulas to measure their flat interest rate and rate reduction. In the case of a flat interest rate, interest payment is calculated on the full amount of the loan during its entire tenure. In the event of a reduction in interest rates, interest on the outstanding principal will be calculated. EMIs are slowly raising the key volume here. Therefore, using a flat rate personal loan could cost you more than a reduced interest rate.
Stable income and history of employment
Individuals with reputable / blue chip or multinationals are likely to get a better offer. This is because the ability of their employer to provide a stable income is greater. Usually, the borrowers believe that they have a steady income and are more likely to repay their dues on time.
Many borrowers even tend to have at least two years of job experience. This refers to your new employer for one year. Lenders also see more attractive borrowers for employees with the state government, the central government, PSUs or quasi-governmental agencies. In addition, your residential stability and the good FOIR (fixed income obligation) are other factors that lenders consider when assessing your credit application.
Check and compare the services offered by different lenders before signing the dotted line for any personal loan offer. Ensure that the decision is based not only on the interest rate but also on other considerations such as loan term, processing fees, pre-payment costs, loan amounts etc.
To begin investigating personal loan deals beginning with just 10.5 percent, click the button below.