One of the most popular and sought-after borrowing options in financial emergencies is a personal loan. According to reports, approximately 77% of the Indian population depend on personal advances to fulfill their diverse financial requirements.
Although being an unsecured credit form, personal loans are quick and convenient. However, obtaining the best personal loans with an affordable interest rate can be difficult. Read on to know the factors impacting the rates and tips to acquire the most affordable personal loan.
Tips to Avail the Best Personal Loan at a Lower Interest Rate
Individuals can check out the following factors to obtain the lowest interest rate personal loan and make repayment with ease:
Tip 1- Research and compare loan offers
This is one of the effective ways to obtain the best personal loan. If a borrower invests substantial time in exploring and comparing lenders’ offerings, it will help them save money and obtain the ideal loan. This comparison can be performed easily by visiting the respective financial lender’s website and browsing through their loan offerings.
In this regard, individuals can use a personal loan calculator and determine eligible amounts, EMIs, interest outgoes, and the overall borrowing costs. This will further allow borrowers to make a comprehensive analysis of different online loan offers and make an informed decision.
Tip 2- Improve CIBIL score
A borrower’s repayment history and credit score are the two essential factors determining their creditworthiness. Usually, lending institutions consider a score of 750+ is ideal for personal advances. Moreover, it is a thumb rule that borrowers can avail better Personal loan Rates and loan terms if the score is higher. Therefore, lenders decide the repayment terms, interest rates, and eligible amounts depending on the score.
Therefore, potential borrowers must try improving their CIBIL score for a personal loan by adopting certain financial strategies, such as paying off debts on time, limiting credit utilization ratio, maintaining a balance while applying secured and unsecured credits, etc.
Tip 3- Select shorter repayment tenor
Some financial institutions extend short-term loans at affordable Personal loan Rates because of the risks associated with the credit. So, if individuals are willing to apply for a personal loan, it is wise to opt for a shorter tenor, allowing borrowers to pay less interest amount at the end of the tenor. However, one must note that choosing a shorter tenor will increase the EMIs significantly. To simplify the process, one can use an interest calculator to determine the overall interest outgo and make an informed decision per requirements.
Tip 4- Healthy employment status
A borrower’s employment status also affects the applicable interest rate. Usually, lenders prefer salaried applicants for their income stability. However, if individuals keep juggling with their job profile, the chances of loan approval get minimal. For this, lending institutions may charge higher interest rates against personal loans due to less credibility.
Hence, prospective borrowers must try working in a reputed company for at least three years to ensure constancy. Moreover, enhancing income structure and maintaining a healthy employment status will allow borrowers to avail better interest rate for their personal loan.
Tip 5- Reduce debt-to-income ratio
Individuals can obtain the best personal loan by reducing their debt-to-income ratio. Lenders conduct a hard inquiry before sanctioning the loan amount. They critically assess a borrower’s repayment history and debt-to-income ratio. Borrowers with multiple financial obligations and less disposable income are not considered reliable. Hence, it is essential to maintain a lower debt-to-income ratio to avail better interest rates against personal loans.
Besides, borrowers can apply for a digital personal loan right from the comfort of their homes. Leading financial institutions like Bajaj Finserv extend online personal loans without the requirement of collateral, processing fees and minimal documentation. All an applicant has to do is check the pre-approved loan offers, and select the preferred amount. Once the loan is sanctioned, the amount will be disbursed into the account with a minimum turn-around time.
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The best part of these pre-approved offers is that they reduce the hassle of extensive documentation and save time. Therefore, intending borrowers can check their pre-approved offers by mentioning their name and contact details.
To sum it up, these are effective tips to acquire the best personal loan efficiently. Therefore, prospective borrowers must seek a reliable lender to ensure substantial savings throughout the repayment tenor.
Eligible borrowers can also enjoy pre-approved offers provided by these NBFCs on a wide range of financing options, such as personal loans, business loans, credit cards, etc. These offers play a significant role in accelerating and simplifying the loaning procedure. Therefore, individuals can check their pre-approved offers by mentioning their names and contact information.
Choosing the Best Personal Loan during emergencies can be challenging, but keeping the pointers mentioned above in mind will allow borrowers to secure their financial health.