How Do I Get Low Interest Rates on Personal Loans Easily?

Personal Loans are ideal credit instruments to tackle any financial crisis, thanks to their no usage restrictions, no collateral requirements, minimal documentation, and quick disbursals. However, securing the best loan plan with the lowest interest rate requires a solid profile, careful decision-making, and strategic planning. That is why it is crucial to calculate the Personal Loan interest rate before borrowing. The interest rate at which you borrow largely impacts your affordability and repayment experience.

Read on to learn how to get the lowest interest rates on Personal Loans easily.

Why is a Low Interest for a Personal Loan Important?

Personal Loan

Whether you need funds for a home renovation project, a foreign vacation, a child’s education, wedding expenses, or a medical emergency, you will find several loan options nowadays with varying interest rates and other terms and conditions. A low-interest rate allows you to repay the borrowed loan without stressing your finances during the repayment tenure. On the other hand, a high-interest rate will cause financial stress in both situations: choose a shorter tenure to reduce the loan cost or opt for a longer tenure to decrease the EMIs but increase the interest outgo.

So, when selecting a loan plan, consider your financial wellness and give attention to the interest rate the Personal Loan provider charges. The key is to compare and choose a lender with the most competitive Personal Loan interest rates.

Tips To Get a Low Interest on a Personal Loan

Since lending institutions consider several parameters to calculate Personal Loan interest rates, here are some tips to grab the best deal that fits your budget:

1. Research and Compare

Research is the first and foremost step to getting a low interest for a Personal Loan. By checking and comparing interest rates from various loan providers, you can quickly compare the loan plans and pick the most suitable one.

Comparing the rates online makes the process even easier. Using online platforms, you can compare different lenders’ interest rates side by side, making the decision-making process swifter and simpler. After identifying a loan deal with the lowest interest rate, check the lender’s eligibility criteria and ensure you qualify for their financial product.

2. Take Advantage of Pre-Approved Loan Offers

Some financial institutions offer pre-approved loan offers to their existing customers. If you have already taken a loan from a lending institution and handled your repayments responsibly in the past, the lender would be happy to send you an affordable pre-approved loan offer. Mostly, these offers come with low interest for Personal Loans because lenders design them according to your credit profile and repayment history. Since your existing lenders are already familiar with your credit history and potential, you may negotiate with them for the best loan offers.

3. Grab Seasonal Loan Deals

If you don’t need money urgently and can wait for the right time to borrow, the best strategy would be to avoid borrowing on impulse and waiting for periodic offers most lending institutions roll out occasionally. These offers usually arrive during festive seasons with the most competitive Personal Loan interest rates, discounted processing charges, and other beneficial perks. So, if your financial requirement is not urgent, wait for such offers to grab a Personal Loan at a low-interest rate.

4. Check and Ensure That You Have a Decent Credit Rating

Checking your credit score and ensuring it is decent is a sure-shot way to get the best Personal Loan deal with a low interest rate. Lenders check your credit score to determine whether it is safe to lend you money and if you can repay the loan on time. That is because your credit score showcases your past credit behaviour through a 3-digit number.

For instance, a score above 700 assures lenders that you are an experienced credit user with a history of timely repayments. Lenders consider it a good sign and offer a lower Personal Loan interest rate. However, if you have a poor credit score or have never taken credit, you must start building it now by making your loan EMIs and credit card bill payments on time.

Avoid applying for multiple loans simultaneously, hoping to get approval from at least some. This strategy will further reduce your credit score and make borrowing even more challenging. Moreover, do not build your life on credit. Plan your expenses within your budget after considering your income and expenses. By using credit smartly and repaying consistently, you can boost your credit score and get low interest on a Personal Loan.

5. Check Your Current Debt

If you are already servicing any loans like a two-wheeler loan, check them before applying for a new Personal Loan. Your current financial obligations may limit your repayment capacity and affect the lender’s decision when calculating the Personal Loan interest rate for you. Usually, loan providers prefer applicants with a debt-to-income (DTI) ratio of less than 30%. Match this requirement by paying off your current debts to get the best interest rate on your Personal Loan.

6. Match the Lender’s Eligibility Criteria

Loan companies have set eligibility criteria that aspiring borrowers must fulfil to apply for a loan from them. These often include your income, age, address proof, work experience, etc., to assess your repayment capacity and financial stability. Not meeting the required parameters may even lead to loan rejection. Therefore, check your preferred lender’s eligibility criteria before applying to ensure qualification.

7. Leverage Existing Relationships with Finance Companies

Similar to a pre-approved loan offer, you may also get a low-interest Personal Loan from a loan provider familiar with your credit history and profile. Prefer approaching a lending institution where you already have a salary account or have previously taken a loan. Maintain a good record with your current lenders by repaying your dues on time and maintaining a positive relationship with them to get the best deal.

These tips can work in your favour when lending institutions calculate the Personal Loan interest rate for your loan application. However, choose your lender carefully to get the best deal according to your eligibility and repayment capacity. Hero FinCorp is a reputable Indian NBFC offering Personal Loans of up to Rs 5 Lakh at interest rates starting at 11%* only.

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Sumit Kumar Yadav has experience analyzing business and finance of big to small companies. Loan, Insurance, Investment data analysis are his key areas.