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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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Personal loans are considered to be one of the most useful credit instruments for individuals who are in need of financial assistance. Whether it is to pay off academic fees, consolidate debt, or even pay for medical bills, a personal loan can help in covering the expenses. Now, while a personal loan can be an effective solution to take care of the bills at hand, one also needs to make sure that the loan can be repaid easily. This is why borrowers are always focusing on the interest rate of the loan since this rate has a major influence on the loan’s Equated Monthly Instalment (EMI) payments.
The interest rate varies from one lender to another, along with a host of other factors. At present, there are quite a few lenders who are charging 10.99% p.a on personal loans. Thus, as this is a variable aspect, some borrowers tend to worry about being stuck with a high personal loan interest rate and then facing financial complications at the time of repaying the loan. However, by keeping a few smart tips in mind, they can effectively get a competitive personal loan rate. Interested to know how? Read the following tips to find out!
1. Build a good credit score before applying for the loan
Financial experts are always stressing the importance of a good credit score. The reason for this is that any lender will always evaluate the credit score of an applicant before offering them a loan. Since an applicant with a good credit score becomes less of a risk for the lender, the applicant can get offered much better loan terms such as a lower interest rate! Ideally, borrowers should maintain a credit score of 750 or more.
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2. Establish stability in your employment record
Financial institutions prefer borrowers who are stable employees as this is an indication that they have the means to pay off the loan on time. Applicants that show financial stability by earning a steady monthly income can improve their chances of getting better loan terms such as a lower personal loan rate or a higher loan amount.
3. Keep an eye out for seasonal deals and pre-approved offers
Financial institutions keep offering seasonal deals that borrowers can take advantage of. Also, it is essential to keep a check for pre-approved loan offers. Borrowers can enjoy a quick loan approval process on such offers and also get lower personal loan interest rates.
4. Satisfy all the eligibility terms of your lender
Before applying for a personal loan, make sure to be aware of the exact personal loan eligibility criteria of a lender. This is not just helpful for ensuring a smooth loan process but also for getting better loan terms. By being aware of the lender’s requirements beforehand, an applicant can make sure to satisfy and exceed all of the lender’s terms which could get them a suitable loan deal.
To find out whether the interest rate offered on the loan is an affordable option, it is advisable to use a personal loan EMI calculator. This calculator displays the EMI payments of a loan based on three components – the loan amount, interest rate, and repayment tenure. Based on the results, users can then decide whether to go ahead and apply for the loan or look for a better deal.
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