The interest rate is one of the most important factors to consider when taking a loan as it determines the cost of borrowing. In this regard, you’ll notice that personal loans, because of their unsecured nature, usually carry a higher rate of interest. However, they’re a lot more flexible in terms of usage and acquisition and further, personal loan interest rates are dependent on several factors. What this means is that you can leverage your financial credentials to get a low interest personal loan from your preferred lender.
To ensure this outcome, follow these 5 smart tips.
Strengthen your credit score
High credit scores of 750 and above are considered to be ideal by lenders and hasten access to credit. In fact, not only does an ideal score promise quick personal loan approval, but it also opens the doors to negotiations so that you can secure a better rate of interest. Therefore, if you have a low or subpar credit score, your priority should be to improve it. You can do this by making timely loan repayments, keeping your credit utilisation ratio in check, avoiding multiple loan applications and by resolving issues in your credit report in a timely manner.
Lower your debt-to-income ratio
Your debt-to-income (DTI) ratio indicates the portion of your monthly income that you can channelise towards the new loan. Hence, it is prudent to keep this ratio within bounds. In order to avail a personal loan, ensure that no more than 40% of your monthly income is going towards existing debt payments. This will make you a low-risk applicant from the lender’s point of view and assure them that you have enough liquidity to pay EMIs along with your fixed expenses. When there is a minimal risk involved in lending to you, lenders are more willing to offer competitive personal loan interest rates.
Look out for seasonal offers
An effective way to secure a low interest personal loan is to obtain one through a seasonal deal. What’s unique here is that the seasonal offering allows you to fetch an attractive rate given your existing financial profile. Most lenders update you about promotional offers via an email or an SMS and others seek to widen their customer base through advertisements, in publications and online. So, take note of these as you may find a highly beneficial personal loan on offer, available only for a limited period.
Apply with a creditworthy co-applicant
You can increase your chances of getting a low interest personal loan by opting for one along with a co-applicant. This is especially useful if you have a low credit score as the co-applicant’s score will also be taken into consideration. Further, with a joint application, the possibility of getting a lower rate is better as two incomes are available for timely repayment. You can also check free credit score online and apply for a loan.
Compare lenders to identify a cost-effective offering
Before you proceed with a loan application, make sure to compare personal loan interest rates vis-à-vis the loan’s features to understand how much you stand to gain. Lenders like Bajaj Finserv give personal loans of up to Rs.25 lakh on competitive terms, which means that you benefit from both, a high sanction and budget-friendly repayment. Additionally, you can opt for a flexible tenor of up to 60 months. This further helps keep the cost of the loan in check.
Best of all, Bajaj Finserv offers Flexi Personal Loans that enable you to borrow from your sanction on the go, paying interest only on what you use. Further, you can choose to part-prepay the loan at nominal charges.
So, make use of these 5 smart tips to secure the best personal loan interest rates available and check your pre-approved offer if Bajaj Finserv’s offering matches your needs. On sharing basic details you get instant approval through a customised deal so you enjoy timely, quick personal loan financing.
