Personal loans are one of the most versatile funding options available in the Indian financial market for various reasons. For one, this cash loan is available for unrestricted end-use, which means you can use the loan amount to fulfil any of your personal or professional necessities. Secondly, with simplified eligibility and minimal document requirements, a personal loan is one of the easiest options to avail instant funding for meeting emergency needs. Thirdly, personal loans come with easy repayment options in the form of EMIs and the interest charged on personal loans is much less than that of credit cards. Today, you can avail a personal loan at attractive rates of interest with much ease through an online loan app.
Though personal loans are available readily today, it is always a prudent to look for the one that comes at the lowest interest rate. There are different ways in which you can negotiate the interest rate with your lender and obtain a personal loan at much lower interest rate. Getting a loan at lower interest rate not only reduces your EMI burden but also decreases the total interest pay out on your loan.
Below given are some ways that can help you get a low-interest personal loan with ease.
Top 5 Ways to Secure a Personal Loan with a Low Rate of Interest
- Compare different lenders
One of the best ways to get a low interest rate on your personal loan is to find the right lender. The Indian financial market today is crammed with several lending institutions that are providing personal loans with varying terms, including the rate of interest levy. Apart from the conventional banks providing funding, you can check out some top NBFCs in the market. Compare the important loan feature like the interest rate, flexibility, terms of repayment, foreclosure clauses, processing fees, penalty charges in case of default, and the customer service.
Today, some of these best NBFCs are providing financing through online loan apps, which only make borrowing convenient. The online loan apps may offer you a personal loan at a reduced interest rate because of their reduced operational costs as compared to conventional banks. Thus, it is ideal to check and compare the available lenders in the market and go for the one offering you the best deal.
- Work on your credit score improvement
The credit score of an individual is a reflection of their past credit behaviour and their overall creditworthiness as a borrower. When availing a cash loan, your lender will check your credit score. A good credit score makes you a low risk borrower and an ideal loan customer. That’s why, the lender might offer you the loan at a lower interest rate. Whereas having a poor credit score, makes you a high risk borrower and the lender might either reject your loan application or offer you the loan at a very high interest rate.
There are different ways that can help you improve your credit score. For example, closing your existing debt, not exceeding your credit card usage limit by 30 %, and maintaining a good income to debt ratio can improve your credit score. Make sure to attempt all these initiatives at least 6 months prior to your application as they may take time to reflect on your score.
- Apply with offers during festive seasons
During festive seasons, lenders often release various loan offers with attractive rates of interest to bring in more customers for their loans and advances. Availing financing during these seasons thus stands you a better chance of securing low rates of interest on your personal loan. You can check out for these offers on various reputed personal loan apps.
This is ideal if your requirement is not urgent and you can wait for a few months. For example, if you are planning to buy a new gadget, home appliance or renovate your house, you can plan these around the festive season. However, for urgent funding needs you can just talk to your lender and check if they can offer you any promotional offer.
- Choose wisely between fixed and floating rate of interest
When finalising your cash loan agreement, you are given a choice to select between floating and fixed rates of interest for the purpose of interest calculation. It is very important for you to know the difference between these two interest rates and how it will impact your repayment. While floating rates change through the loan tenure as per the market changes, fixed rates remain the same throughout.
That means if you opt for a floating loan, your monthly EMI may vary as per the market rates. But with fixed interest rate your EMI as well as the total interest pay out will be fixed for the entire loan tenure. Also, fixed rates are usually a notch higher than floating rates and can turn out costly depending on the market fluctuations. If you want stability then a fixed interest rate may be more suitable but if you have the capacity to adjust with higher EMIs on some months, then you must go for floating interest rate.
- Apply with a co-borrower having excellent income and repayment record
If your eligibility profile does not adequately fulfil the requirements or you are finding it difficult to negotiate the rates with your lender, you can always choose to apply for the loan with a co-borrower who holds a high creditworthiness and has a stable income. This shall combine the overall eligibility to represent a better financial capacity, thus enabling you negotiate for the best rates available on your cash loan.
Since, bringing in a co-borrower diversifies the risk associated with your loan account; your lender might be open to offer you better deals, like reduced interest rates or zero processing fees. However, do remember, that missing your EMI payments or defaulting on your loan will impact the credit score of both the borrowers and impact your future possibilities of obtaining a loan.
With these simple and smart tips, you can easily secure low rates of interest on your cash loan with ease. If you have already availed a personal loan, seek out lenders offering balance transfer facility with a low rate of interest to enhance the overall financing affordability. With suitable repayment facilities available, you can also choose to prepay your loan in a lump sum and save on your interest.