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07 OCTOBER, 2022
A personal loan can be very useful in times of distress. Whether it is to take a sudden trip, pay for a wedding, or even something serious such as covering medical bills, a personal loan can help in arranging the required finances. While this loan can be an effective solution to tackle a cash crunch, it is also very important to make sure that the loan can easily be repaid without any financial hassles. This is why personal loan borrowers need to focus on the personal loan rate that lenders are offering to make sure that the loan is affordable.
If you are looking to apply for a personal loan, make sure to keep the following tips in mind that can help in getting a lower interest rate:
1. Opt for a long repayment tenure
If you are worried about having to pay a hefty interest payment, choose the longest repayment tenure offered by the lender. This way, the Equated Monthly Instalment (EMI) payments will be minimum as they are spread over a longer tenure. However, do note that over a long period of time, you will end up paying more interest on the loan.
2. Apply for a personal loan with a co-applicant
There are a number of factors that financial institutions take into consideration while evaluating your personal loan eligibility. An ideal applicant would have a decent credit score, a stable employment record, and earn a regular monthly income. Such applicants are considered to be a low risk for lenders, which is why these applicants can get better terms offered. Another way to boost your eligibility is to apply for the loan with a co-applicant, which helps in reducing the lender’s risk. This increases the chances of the lender offering better loan terms such as a lower interest rate.
3. Use investments to clear off the loan burden
If the interest burden of your personal loan is getting unbearable, one option is to make use of your investments to clear the loan. This means that you could liquidate an asset to clear a high-interest debt, which could be more beneficial rather than getting stuck with a penal interest higher than the potential earnings of the investment.
4. Use any surplus gains towards paying off the loan
It is common to receive yearly bonuses or incentives at work. Rather than using these funds for non-essential expenses, it is better to focus on paying off the loan’s EMIs. This can help in reducing your interest payments as well as get you debt-free sooner.
5. Apply for a personal loan balance transfer
In some cases, borrowers have already taken a personal loan and are now struggling with the interest burden. One effective solution to this is to apply for a personal loan balance transfer. This transfer involves shifting the outstanding loan amount from one lender to another for better repayment terms. So, if you are struggling with the interest payments of your loan, consider transferring your personal loan to another lender that offers a lower personal loan interest rate to ease your EMI payments.
Kotak Mahindra Bank offers competitive interest rates to borrowers looking for personal loans. Visit Kotak’s website to learn more about various personal loan plans and pick one that suits your budget.
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