The most sough-after loans are personal loans as they are the fastest to be disbursed with minimum documentation. Personal loans can come in handy in emergencies as well as for all kinds of personal purposes. Before applying for a personal loan, you must however compare all the rates of personal loans offered by different banks. While most banks maintain more or less the same interest rates on personal loans, you can always avail some special discount or rebate on the rates as it depends on the applicant’s profile.
Working on your personal loan application by following certain tips, you can avail better interest rates, they are:
Banks decide approval of personal loans based on your credit score. A good credit score gives you a better chance of availing lower interest rates on personal loans. Your credit score can be maintained by making payments on time and continuing to keep a clean credit history.
Banks prefer individuals with a credit score of over 700, therefore it is a good idea to maintain your credit score from 700 to 900.
A long term track record is also as important in getting a lower interest rate for personal loans, as credit score. If your repayment record for another loan is good, you will be at a better position for negotiating on interest rates.
Banks offer lucrative interest rates at certain times to match up to the competitive corporate rates being offered by other banks. These attractive schemes are launched usually at festive season and lasts for a limited period only. Taking up a personal loan during such times is very beneficial and could help you cut down on your loan expenses.
Do not choose a personal loan scheme purely based on its low interest rates. You must also understand the complete loan calculation while availing a personal loan. Although some banks or lenders may offer personal loans with low interest rates, sometimes the calculation do not include the gradual repayment of principal and interest amount.
Sometimes you may avail a flat rate that could cost you more than a diminishing interest. A diminishing loan rate implies payment of interest towards the outstanding balance only, however a flat rate requires you to pay interest towards the loan amount throughout the entire loan tenure.
Sometimes you can avail a discounted interest rate on personal loans, based on your relationship with a bank. If you are an existing and old customer of the bank, the bank offers you better interest rates to retain you as their customer. Another advantage in taking a personal loan from a familiar bank is that the lender is aware of your credit behaviour, which works as a reassurance while providing a loan.
Responsible customers have the privilege to avail an attractive interest rate than what is provided to other customers.
If you are working for a reputed firm or an organisation, then it helps if you are looking to avail a personal loan for yourself. The bank understands that a reputed firm is more at ease providing a steady job. If you are a part of a similar firm, the chances are you are secured and have a stable income which compels the bank to feel confident of offering you a loan.
Apart from following these tips, you can try and make a conscious effort in keeping your credit score high by taking the following steps:
Getting a personal loan at a lower interest rate is as crucial as getting a good scheme from a good bank. By being aware of your credit behaviour and managing your finances in a well-planned manner can give you that much needed support on time. Even a small slip-up on the financial front can have a poor impact on your personal loan application.
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