The goal of wise borrowing is to meet your financial demands as economically as feasible. Although, today you can apply for a cash loan with much ease and for any purpose, paying attention to the interst rate is very crucial. Availing an instant personal loan at high interest rate, would not only increase your EMI burden but it will also make your loan very costly. Thankfully, many Fintech companies offer you personal loans at much affordable interest rates.
Today, you can easily avail an instant personal loan at a comparable interest rate. In addition to this, a cash loan can be availed with minimal documentation, easy eligibility and flexible repayment period. These are some of the reasons fuelling the growing popularity of personal loans.
Read on to discover these pro methods for obtaining the best interest rate on your personal loans.
Pro Tips to Get A Personal Loan at the Best Interest Rate
Before you avail a personal loan, you must consider your future financial stability and pay special attention to the interest rate charged on your loan. Select the lender with the most affordable rate, and only apply for a personal loan when it is financially feasible.
Here are a few tips to get a personal loan at the best interest rate.
- Compare online, and check again.
Doing your research right is the most crucial step before availing a personal loan. With a loan app, you can now quickly compare the interest rates offered by different lenders. It is very important to do this comparision before choosing your lender.
Once you sort the lenders offering the lowest interest rate, then you can check the other loan features. In addition to the interest rates, you must also check the processing fees and other fees associated with the loan. Sparing a few moments in research can help you save big on your loan interest.
- Pay attention to pre-approved offers
Some lenders provide pre-approved instant personal loans to their previous and current customers. Since loans are extended based on the borrower profile, they typically have the lowest interest rates. You are more likely to receive a reasonable offer if you have previously repaid your loans responsibly and on time. You can also negotiate with the lender for better terms on your loan offer.
Look at these preapproved loans before finalising your lender. Getting your loan pre-approved can also reduce the paperwork and disbursal time. Thus, it is crucial to check your messages and mailbox to know your pre-approved loan offers.
- Ensure that you have a high credit score
Maintaining a high credit score is the sure shot method to acquire a low personal loan interest rate. A credit score informs a lender of your likelihood of repaying a loan. Your credit score reflects your creditworthiness. Having a good credit score ensures the lender that you are a low risk borrower. Thus, they may be open to offer you great discounts on interest rates and loan fees.
If your credit score has suffered due to past negligence then there are several ways to improve your credit score. You can start by repaying your existing debt, consolidate your loan accounts if you have multiple ongoing debts, keep your credit card usage under check and more. It is also important to keep the bureau updated and check for any discrepancies.
- Assess your current debts
Check your debts to see if you still owe any loans before applying for a personal loan. These may include mortgages, loans for cars or two-wheelers, or anything else. Your ability to repay existing debt is limited, which will be considered by the lender.
Typically, lenders will only allow personal loan applications if your FOIR, or fixed obligations to income ratio, calculated by dividing your total debt by your monthly pay, is under 30%. By paying off part or all of your debts, you can meet this ratio and receive a personal loan with a low-interest rate.
- Explore seasonal personal loan discounts
Availing periodic offers released by lenders is another technique to get the best personal loan interest rate. Lenders often offer promotional discounts during the festive and holiday seasons. You can download a loan app and keep a tab on these promotional loan offers.
However, this is only applicable when your need for finances is not urgent. If you need a cash loan for medical emergencies or any other urgent reasons, then waiting for the festive season may not be feasible. However, if you need the money for an aspirational purchase like a phone, laptop or home appliance, then waiting for the festive season can bring you amazing discounts.
- Meet or exceed the lender’s requirements for eligibility
Every borrower must adhere to the conditions specified by the lender to obtain a loan. These concern your earnings, past and present employment situations, age, and other factors. Most of these factors affects your ability to repay the debt.
You can obtain a personal loan with a lower interest rate when you satisfy all of the lender’s specified requirements. You have a better chance of getting a low rate if your salary meets the lender’s needs based on where you live. In addition to this, your credit profile and your existing debt also plays a crucial role.
The Bottom Line
Before approving a cash loan or personal loan, lenders typically take into account a variety of variables, including the loan amount you have requested, your ability to repay the loan, and even the firm you work for.
Personal loans typically have higher interest rates as compared to other loans, such as home loan or car loan. This is because a personal loan is an unsecured loan unlike the others. However, with smart financing you can avail a personal loan at much lower rate of interest. The best thing about a personal loan is that it offers unrestricted end-use. You can use the loan amount in any way you seem fit.
In conclusion, before applying for an instant personal loan, make sure to follow the above pointers. You can also add a co-applicant to your loan application or offer a collateral to get better loan interest rates.