Personal loans have grown as a solution for people who need quick cash. This includes vacations, weddings, car purchases, and many other things. The borrower has complete freedom to use the loan amount in whichever way they want.
Take out a personal loan with a reasonable interest rate because they are unsecured financial products. Personal loans also bring a financial burden because you have to pay them within the specific tenure. This includes paying interest on top of the principal. Try to get a speedy loan disbursement at the best interest rates.
How to Get Lowest Interest Rate on Personal Loan?
Refer to these points to get the loan at the lowest interest rate:
Boost Your Credit Score
You are creditworthy if you have a high credit score. Applicants with good credit scores are preferred by banks. Before requesting a personal loan, you should check your credit rating. You should look for ways to raise your credit score if it is below 750. If your credit score is over 750, you have a better chance of receiving a personal loan with a low-interest rate.
Timely Payment of EMIs
Your credit score may suffer if you forget to make timely payments on your loan or credit card. Before setting the interest rates on personal loans, lenders typically consider your repayment history. Your chances of getting the loan at the lowest interest rate will be high if you have made timely payments in the past.
Check the Best Offers
During festive times, banks and other financial institutions typically provide special interest rates for a certain period. You can avail the benefits of the festive season and get a personal loan at the best interest rates.
Interest Rate Comparison
It is important to check the personal loan interest rates charged by several NBFCs and banks before requesting a loan. This comparison is required to avail of the loan at reasonable interest rates.
Factors Affecting Personal Loan Interest Rates
Check the prominent factors that impact personal loan interest:
When setting the interest rate for a loan, lenders consider the applicant’s income. High-earning people may have a reduced interest rate since the bank consider them less risky. Conversely, those with lesser yearly salaries might have to pay a higher interest rate.
The bank or financial institution is more likely to give you a loan at a cheaper interest rate if you work for a reputable company.
The Type of Employment
Your interest rate may vary depending on the fact whether you are salaried or self-employed.
The loan provider’s quoted interest rate may vary depending on your age. You may have to pay a high interest rate if you are getting close to your retirement age.
Connection to the Loan Provider
If you are opting for a personal loan, being an existing client of the bank or financial institution you can get a loan at a lower interest rate. This is because you may have a solid connection with the lender. The bank reserves the right to decide whether to give a low interest rate to current customers. or not.
What is meant by Reducing Interest Rates on Personal Loans?
When you take out a personal loan with a fixed interest rate, the interest is computed throughout the course of the loan. In contrast, the interest on a loan that has a falling interest rate/dropping balance rate structure is only computed on the amount still owed. Thus, the interest for the remaining loan term will be calculated on the outstanding loan sum when you make a monthly repayment.
Things to Consider While Taking Personal Loan
There are a few additional factors to take into account when choosing a personal loan with a low-interest rate:
The processing fee is a one-time fee assessed by loan providers that raise the cost of the loan. Even if the interest rate is low, you should still check and evaluate the processing fees levied by various lenders.
Charges for Pre-Closure
If you pay off the remaining loan sum before the loan repayment term is over, certain banks may charge you a pre-closure fee. Verify whether the bank or financial institution to whom you are applying charges a pre-closure fee.
Applying to a lender that provides customer service is important to have a happy borrowing experience. You should investigate the customer support options before completing your loan application. Also, check how the lender responds to your queries.
Even though the bank or financial institution may offer personal loans at cheap interest rates, you should always make sure to meet their eligibility criteria. Ensure that your income and age are within the said limit.
Calculation of Personal Loan Interest Rate
A vital part of finding the loan amount is the interest rate on the loan. You must check the interest rate for personal loans in advance. Use variables like the loan amount and the loan timing.
The following is the formula used to determine the EMI and interest rates for personal loans:
P r (1+r) ^n / ((1+r) ^n-1)
“P” stands for the loan’s principal
“R” for the monthly interest rate
“n” for the loan’s term
A personal loan is immediate financial assistance that you can get to meet planned or unplanned expenses. To cover your financial needs, you can get a personal loan. You may easily apply for a personal loan either online or offline. Before applying for a personal loan, you should compare the interest rates provided by the various institutions. The interest rate could range from 7.90% per annum to 49% per annum.
Visit the official website of Piramal Finance to know about Personal Loan Interest Rates. Check their informative article and explore the various products and services they offer.