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11 APRIL, 2022
There was a time when personal loans were used for just urgent needs. It could be due to the complex application process and stringent eligibility. However, the situation has changed today. People take personal loans for varied reasons like weddings, medical emergencies, travel plans, debt consolidation, home renovation, higher education, etc., and why not? It is convenient to apply for a personal loan with its online application process. You get the facility of flexible repayment and you can avail a personal loan without collateral. However, you must ensure to get affordable interest rates to repay the loan comfortably. While the lender determines the interest rates, here are some tips that can help you get affordable interest rates on a personal loan.
Avoid choosing the first lender you come across. Researching different lenders can help you find the best loan deal and interest rate and help you save money. Also, do not consider only the interest rate for choosing the lender. A lender can offer a low-interest rate but charge a high amount for other processing fees and have poor services. Instead, do thorough research on all the aspects of the loan while choosing the lender.
Your credit score is a crucial element to get an affordable interest rate. It reflects your creditworthiness and repayment capacity, and so the lender carefully scrutinizes it before processing your application. Before availing a personal loan, you must ensure that you have a credit score above 700. Lenders consider borrowers with a high credit score as financially disciplined. Such borrowers often get faster approval and lower interest rates.
Ensure to pay all your bills and credit card dues on time. Restrict credit utilization ratio below 30% and monitor loan accounts co-borrowed by you. In addition, you must maintain a healthy credit mix and regularly check your credit report to identify discrepancies.
Lenders launch good offers in festive and season time. The intimation of such offers is often given through emails and messages to customers. Watch out for such offers. These offers are for a very short time. You can get low-interest rates and the best deals on loans in such offers.
You must avail a personal loan from a lender with whom you have a past banking relationship. It could be through investments or a current/savings account, fixed/recurring deposits, or existing loans. Often lenders offer preferential interest rates to existing customers, especially if they have a good banking relationship.
Lenders can also determine your interest rates after considering your employer’s credibility. If you are employed with a reputed organization, you are less likely to make defaults or miss out on payment. It is because such employees usually have a steady and regular source of income. Similarly, lenders can choose to offer high-interest rates for self-employed applicants or freelancers if they do not have a substantially stable income.
You can get a personal loan at affordable interest rates by reviewing your credit score regularly and managing your finances judiciously. You can follow the above-mentioned tips to get the affordable personal loan interest rates on a personal loan.
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