Personal loans provide a helpful and instant financial solution for urgent expenses and unexpected costs. Not only that, but personal loans can also be used for other purposes such as weddings, home renovation, travel plans, etc., so you are not just restricted to using them in emergencies. They are relatively easy to obtain and offer the convenience of quick processing and disbursal times.
While you can enjoy the easy application, no collateral, and quick disbursal features of a personal loan, it is important to avail it at the lowest interest rate possible. The interest rate on a personal loan is the cost of borrowing money, expressed as a percentage of the total loan amount. The higher the interest rate, the more you will have to pay over the life of the loan.
Although personal loan interest rates can vary depending on the borrower’s creditworthiness and lender’s criteria, here are some pro tips to help you get the best interest rate possible.
- Compare multiple lenders online
Since interest rates can differ significantly from lender to lender, it is important to compare multiple lenders before taking out a personal loan. A personal loan EMI calculator can be a helpful tool in this process. By adding the loan amount, repayment period, and interest rate, you can estimate your monthly EMIs (equated monthly instalments).
Besides comparing different interest rates, the calculator also helps to understand the total loan cost based on different repayment periods. And once you evaluate these options, you can confidently click on the personal loan apply button.
- Provide all your income details and sources
You should mention your salary and any additional sources of income such as regular dividends or rental income, to the lender. Including all income sources increases your personal loan eligibility and shows lenders that you are capable of making regular loan payments. It also proves that the money you are requesting is not beyond your repayment ability. Note that the lender may ask for proof of income or additional documents to verify your financial status.
- Keep an eye on seasonal offers
Lenders often revise their interest rates, terms, and other aspects during special occasions. During a season offer period, you can have the chance to secure a lower personal loan rate and reduce your total loan cost. Moreover, these offers can also provide some additional benefits like extended repayment options or waived processing fees. These offers are usually around for a short period, so it is important to remain alert and follow-up when you spot an attractive offer through advertisements, emails, calls or SMS notifications. Also, check the official social media accounts of lenders as they also promote their financial projects there.
Closing notes
Qualifying for a low personal loan interest rate requires careful planning and consideration of various factors. Be sure to evaluate your financial needs to determine how much you should borrow, assess your credit score, maintain a clean repayment history, reach out to your professional network for referrals, and consider previous relationships with lenders that may give you an advantage.
By working through these tips and details step by step, you can significantly improve your chances of qualifying for a low interest rate personal loan.