Personal loans are an ideal solution for meeting your urgent financial needs like funding a marriage, meeting medical expenses, or buying a car. These loans are unsecured and so do not require collateral and can be used for any ethical purpose. But the availability of credit without any kind of security or collateral comes at a cost- interest rates that are higher than on secured borrowings.
Does that mean that you should not resort to this funding option? No, instead you should look for ways to get personal loans at low or attractive interest rates. Here we talk about certain tips that can help you get the lowest interest rate personal loan.
Maintain a Good Credit Score
Credit score is the main criteria looked at by lenders before sanctioning a loan. The credit score is a reflection of your credit history and your track record in paying off your earlier dues or loans on time. So if you have a credit score of 700 and above, you have high chances of getting a personal loan at attractive interest rates. And in case you have a credit score that is close to 900, you get even better offers.
You can ensure that your credit score remains above 700 by being up to date with all your credit card dues, EMI payments, and any other dues. You can do this by automating your bill and EMI payments. Another way to improve your credit score is to keep your credit utilisation level low. This means you do not use the full amount of credit available to you.
Approach A Bank
A bank where you already have an account or whose loans you have already paid off on time is a good option to approach for a fresh personal loan. Since the bank is aware of your credentials and previous track record, they will be willing to offer you a personal loan at attractive terms. Many a time, these banks pre-approve a loan to you which you can avail of when the need arises. You can get an instant personal loan pre-approved online.
Check the Interest Calculation Method
It is always recommended that you check the method being used by a lender to calculate the interest rate applicable on personal loans. This will help you avoid loans that offer low-interest rates on the front but cost much more in reality.
Have a Stable Source of Income
Another major requirement of lenders is that the applicant should have a stable source of income. Lenders generally prefer applicants with a stable job for the past two years including one year with the current employer. Stability in an applicant’s life and income is an indicator that he will be in a position to repay the borrowed amount on time.
Compare Different Options
You can compare the personal loans and their terms and conditions offered by different lenders. But merely comparing the applicable interest charges is not enough. You should also compare the method of interest calculation, other charges associated with that personal loan. and so on. You can even use a personal loan EMI calculator to find out the EMI for a loan for different durations and finalize a convenient debt repayment schedule.
