A personal loan is the most popular form of getting instant funds. If you are faced with an emergency, or you want to renovate your dream home, you can get personal loans without any collateral.
With the development of advanced technologies, for instance, mobile apps, you quickly apply and avail an instant personal loan in just a few clicks. Yet, availing personal loan on a low rate of interest may still seem like an impossible task for many. It is because the money lenders consider various parameters for calculating interest on personal loans. If you are seeking a personal loan at the best rate of interest, then this blog is for you. Keep reading to learn out how to get the best rate of interest on a personal loan.
Maintain good CIBIL score
Credit score for getting any loan is crucial, and it is a vital parameter for an unsecured loan. The foremost thing that the money lenders check is the CIBIL score. With the help of CIBIL score, they got an exact idea about your loan repayment capabilities. CIBIL score has a range from 300 to 900 points. For getting personal loan eligibility, you must have a CIBIL score of 750+ points. You still get the personal loan below 750 points, but you have to pay a higher rate of interest. The better the score, the better the interest rates would be.
If you are afraid that you could not make it due to poor credit score, then do the following checks for improving your credit score.
- Maintain your credit utilisation ratio within the 30% limit.
- Check your credit report at regularly by making an online inquiry.
- Avoid direct loan and credit card applications to lenders.
- Maintain a good credit of both secured and unsecured loans.
Make use of professional credentials
Ask your employer if they have good connections with lending institutes. Your employer might help to get you a loan at a better rate of interest. Besides, also use your professional credentials for negotiating the interest rate with the moneylender. If you work with a multi-national company and draw a high salary, it can help you get a low-interest rate on personal loans.
Avail seasonal offers
Many times, money lenders provide lucrative offers to attract borrowers. You can track the money lenders and check out their website or mobile apps for such offers. The money lenders can also access the loan with zero processing fees. Besides, you even get the customised or pre-approved loan deals if you maintain a good credit score. Such offers are very much beneficial as it is easy to avail the loan with no processing fees and at a low rate of interest.
Apply with a known lender
When you apply for a loan with an established lender, then the chances of negotiation are high. As the lender is entirely aware of your credit and your previous credit history, he can provide you with several benefits on a personal loan, including a lower rate of interest. Besides, you even get special discounts on interest rates as the lender provides it only to their existing borrowers.
Compare all offers
Compare the rate of interest of several money lenders as the entire personal loan process is available online. You easily inquire about your eligibility, your interest rates, your EMI amount and the repayment tenure of the loan with the online personal loan calculator. Visit the website of the money lenders to get complete information. You can even check out your EMI amount, including the principal and the interest amount. This way, you can analyse the interest rates and processing fees of different money lenders and select the best deals.
Check the interest calculation method
Different money lenders have different tactics for calculating interest. There are two types of calculation for the interest rate. The compound interest process which calculates the interest on the reduced balance of the payment, and the simple interest process which works on the loan amount. The simple interest is fixed, and it is added in your principal amount. While the compound interest is calculated on the decreased and remaining loan value. Thus, you need to check out the method the lender is following before availing the personal loan.
Do remember, as it is an unsecured loan, the personal loan interest rates are generally higher when compared to the other form of loans.