You may be presented with monetary challenges at least once in your lifetime. In today’s dynamic world, where everything comes at a cost, immediate access to surplus funding can be a little challenging. You may need money to take care of several lifestyle needs, such as funding your child’s education, marriage, emergency medical expenses, starting a business or expansion of existing business, or even covering for a vacation abroad. Whatever the case, it is not always possible that you have a surplus amount saved in your savings account.
This is where you can take a personal loan. A personal loan is one of India’s most popular financing options that people use in emergency situations. One of the biggest advantages of availing a personal loan is that you can use it to fulfilling any requirements. However, since it is an unsecured loan, the interest rate attached to the personal is quite high.
So, it is important that you research the market before purchasing the loan because, in the long term, paying the EMI with a higher interest rate can become unmanageable.
In order to find the best personal loan interest rates, here are some factors to consider.
#1 Maintain a Good Credit Score
The easiest way to get a better interest rate on a personal loan is to have a higher credit score. If you have a credit score of 750 or above, your chances of getting the best personal loan deal are quite high. You are advised to maintain your credit utilization ratio within the 30% limit. This, your credit score won’t be affected. Nevertheless, you are also advised to keep a tab on your credit report regularly, try to avoid credit cards as much as possible. Credit cards may seem like a convenient option to get easy access to funding, but they can easily ruin your reputation in the market. On the other hand, avoid taking direct loan applications to the lenders. If you are able to maintain a good credit score, the lenders will be more than willing to provide you with a personal loan.
#2 Ensure that your Repayment History is Quite Good
The second most important point to focus on is your repayment history. Before you go and apply for a loan, make sure that your finances are on track, and you are regularly paying and clearing your existing debts on a timely basis. If you use a credit card(s), make sure that you repay the due amount as soon as possible. Delaying the payment even for a single day can affect your credit score. When you repay the EMIs on time, it gives the lender a good impression about your creditworthiness. Good creditworthiness means you have a better chance of negotiating the interest rate with the lender.
#3 Shop Around
Always remember to shop around before you finalize your lender. This is important because there is a whole host of lenders offering personal loan schemes to the consumers. While all these schemes are designed based on the market, different lenders have different policies and market standing. So, each one will present you with a different product. So, it is vital that you assess the potential lenders before choosing one. In case, if you are already an existing customer with the lender, then your chances of getting a personal loan rates with better interest rates are higher.
Last but not least, always check the interest calculation method of the lender. There are possibilities that even if the lender offers you a lower interest rate, you may end up paying a higher interest amount.