There is no doubt that a personal loan is one of the most popular methods of financing an emergency. It is possible to take out a personal loan and use the funds for any reason you wish. Personal loans are generally unsecured, which is why their interest rates are higher than other loans. The development of technology has made it easier for people to get a quick personal loan. Despite this, it is still a difficult task to obtain the lowest interest rate personal loan.
Listed below are a few tips to get the lowest interest rate personal loan in India
Keep your credit score high
In general, a score closer to 750 is considered to be a good score by most banks. You can easily secure a new loan with a good credit score. A person with a higher credit score usually gets the lowest interest rate personal loan. A high CIBIL score signifies responsible credit behavior and higher creditworthiness.
Keep a good track of repayments
Pay your loan EMIs and credit card bills on time and in full. Doing so will maintain a good credit history, which will help you negotiate a better interest rate with the lender when applying for the lowest interest rate personal loan in India.
Compare different lenders interest rates
You should always consider visiting an online financial marketplace if you meet the eligibility criteria of more than one Bank regarding personal loans. It will allow you to compare the different offers made by various banks. If you do this, you will be able to get the best deal for your money.
Take advantage of special offers
It would help if you always keep an eye out for special offers when applying for the lowest interest rate personal loan, such as those offered during the festive season. Banks often launch attractive schemes during the festive season, which offer lower interest rates for personal loans than usual, which will ultimately help you save money in the long run by getting a shorter loan repayment period.
Maintain a good relationship with Bank
You may be able to secure a personal loan at a discount interest rate along with better terms of service if you have an excellent existing relationship with a bank. Because the Bank or lender knows your responsible credit behaviour, there is, as a matter of fact, a lower degree of risk involved as compared to lending to a new customer.
Method of interest calculation
When taking out a personal loan, it is always a good idea to check the method by which a particular lender calculates the interest on the loan. Often, loans are offered at a lower interest rate, but you will pay a higher interest. The interest rate on a loan can either be flat or lower depending on the type of loan you are applying for. With a flat interest rate, the interest rate is calculated on the entire principal of the loan. However, in the reducing balance method, the personal loan’s interest is calculated only based on the loan’s outstanding principal. Therefore, if you consider taking out a personal loan with a reducing interest rate, you may end up paying less than if you are taking out a personal loan with a flat interest rate and vice versa.
Possess a good work history
It may be possible for you to obtain the lowest interest rate personal loan if you have a long and stable employment history. There is a common requirement that lenders require applicants to have at least a two-year employment history, plus one year with their current employer, to qualify for the loan. In most cases, people who work for reputable public and private organizations, government departments, etc., are offered personal loans at a much more favourable rate of interest and terms. They are less likely to default on their debts since they have stable jobs and incomes. NBFC sometimes offers personal loans without salary slips to individuals with good credit scores.
Obtain a loan from a known lender
If you apply for a loan with a known bank or financial institution, you have the advantage of negotiating your loan terms with the institution. Existing customers are provided with better interest rates and service terms by lenders. In addition, you may take advantage of special discounts offered only to existing customers by lenders.