HomeBusinessGet a Personal Loan at the Lowest Interest Rate in 7 Steps

Get a Personal Loan at the Lowest Interest Rate in 7 Steps

According to a recent report, the RBI has kept the repo rate at 4% in January 2022. This decision indicates that individuals can gain the lowest rate on a personal loan. This will make the repayment structure feasible and help boost the scale of the savings.

However, potential borrowers must check ways to gain affordable personal loan interest rates and simple servicing terms from a reliable lender.

What are The Ways to Gain the Lowest Personal Loan Interest Rate?

Individuals can check these factors to gain a competitive interest rate on personal credit borrowing:

1. Maintain a stable income

Individuals should know that lenders conduct a hard inquiry with every loan application. They assess an applicant’s income before accepting the loan application. This ensures that the applicant is trustworthy and capable of making repayments.

This is why lenders prefer applicants with a stable income source or higher salary. Since lenders become risk-free, they levy the lowest rate personal loan

In this regard, applicants can disclose their additional income sources to improve their credibility.

2. Creditworthiness

Repayment history and CIBIL score are the two essential factors that substantiate an applicant’s creditworthiness. 

Ideally, a lending institution considers applicants with a 750+ CIBIL score and a reliable repayment history ideal for a personal loan. These borrowers are liable to receive better service and a reasonable interest rate.

Hence, potential borrowers must try improving their CIBIL score for a personal loan by practicing some techniques, which include:

  • Refraining from multiple loan applications at a time
  • Keeping the FOIR below 40%
  • Making pre-payments
  • Timely repayments
  • Clearing outstanding dues and more.

3. Lower debt to income ratio

Individuals can gain the lowest rate on a personal loan by reducing their debt to income ratio. As discussed earlier, lenders conduct a hard inquiry before approving loan applications. They assess an applicant’s repayment history and debt to income ratio.

Applicants with multiple liabilities and unbalanced disposable income are considered unreliable. Hence, it is important to maintain a low debt to income ratio of nearly 40% to improve credibility. This way, individuals can easily convince lenders to levy an affordable interest rate on their personal credit borrowing. 

Borrowers can use their surplus funds to clear the outstanding debts to reduce their EMIs and interest outgo. In this regard, they can use a personal loan EMI calculator online and assess possible savings.

4. Credible employment status

An individual’s employment status also impacts the levied interest rate. Typically, lenders prefer salaried individuals due to the assurance of timely repayments. 

However, individuals who keep changing their job profiles or roles frequently can face difficulties in loan approvals. Lending institutions may levy a high-interest rate on a personal loan due to poor credit.

Hence, potential borrowers should try working in a firm for at least three years to ensure reliability. Improving income structure and maintaining a credible employment status are the ways individuals can avail of better interest rates on a personal loan.

5. Compare different lenders 

Potential borrowers must know that personal loan interest rates can vary from lender to lender. Since the market is filled with multiple lenders, choosing a reliable lending institution offering an affordable interest rate can be challenging.

One can use an interest rate calculator and compare the different lending options before deciding. This will help them find a reliable lender levying compatible repayment structures and extending customized features.

For instance, lending institutions like Bajaj Finserv extend pre-approved offers to reliable customers. These offers simplify the loan application process. Such offers are available on financial products like personal loans, business loans, etc. Check your pre-approved offer by entering your name and contact number.

6. Balance transfer 

Individuals can avail of the lowest rate on a personal loan by opting for a balance transfer. This allows existing borrowers to transfer the outstanding balance to a suitable lending institution.

However, this feature is subject to availability and lending institutions’ policies. Refinancing allows borrowers to save significantly on repayment obligations. It is beneficial to opt for refinancing during the initial years of the loan tenor for a lucrative output.

7. Seasonal offers

Individuals can keep a tab over the seasonal offers extended by lending institutions to attract borrowers. They may extend low-interest rates on a personal loan or similar credit forms for a time period. 

These are the top ways to gain the lowest rate on a personal loan. Potential borrowers must always search for a reliable lender to maximize their savings.

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