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Your money: Here?s how you can get better interest rate on personal loan

The Financial Express logo The Financial Express 08-04-2020
Availing a low-interest personal loan is still a difficult task. © Provided by The Financial Express Availing a low-interest personal loan is still a difficult task.

A personal loan is one of the most popular financing options for an emergency. You can avail a personal loan and use the funds for any purpose. It is an unsecured loan, and this is the reason for personal loan interest rates being higher than other loan interest rates.

With new developments in technology, it has become easier to get a quick personal loan. Yet, availing a low interest personal loan is still a difficult task. It is because lenders consider many parameters for charging a lower interest rate on a personal loan. Read on to find out how to get a better interest rate on a personal loan.

Maintain a good credit score

Since a personal loan is an unsecured loan, the most important eligibility criterion is a good credit score. A personal loan is not backed by any asset as a security. Your credit score is the only sign of your creditworthiness and assurance for the lender. If you maintain a high credit score, there are chances of getting an instant personal loan at a lower interest rate. Now you can also check free CIBIL scores online and take steps for improvement.

Make use of professional credentials

You can use your professional credentials for negotiating the interest rate with the lender. If you work with a reputed company and draw a high salary, it can help you get a low-interest personal loan. If your employer has good connections with the lending institutions, it can also get you a loan at a better interest rate.

Avail seasonal offers

Lenders provide seasonal offers to customers like lower personal loan interest rates and zero processing fees. You should look for these offers that can get you a lower interest rate on your loan. Many lenders provide a facility for customised pre-approved loan deals. You can also take advantage of these offers to get a low-interest rate on loan.

Apply with a known lender

When you apply for a loan with a known bank/financial institution, you get leverage for negotiation. Lenders provide better interest rates and service terms to existing customers. You can also avail special discounts on interest rates that lenders provide only to existing customers.

Compare all offers

With the option to apply and avail a loan online, it has become easier to inquire about different loan offers. Now you can visit the websites of the banks and financial institutions and get complete information about their offers. This can help you in making a comparative analysis and get a better interest rate. You can also use an EMI calculator to check your eligibility for the offers before you apply for it.

Check interest calculation method

Different lenders have different methods for calculating the interest on your loan amount. Low interest rate does not necessarily mean a lower amount of interest. You should check the technique of interest calculation to determine the amount of interest you have to pay for the loan amount. Now that you know some simple ways to get better interest rates, you can apply for a personal loan with a low interest rate.

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