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Personal Loans come in handy to meet your urgent expenses
and can be a real friend in need, especially if taken at affordable rates and
charges. However, given the plethora of schemes and offers from a large number
of banks, figuring out the best interest rate loan is not an easy task. Here are
7 simple ways to ensure that you
Apply
for a Personal Loan that is affordable in your pockets:
- Don’t go the banks yet: When you think of a personal loan
what pops into your mind first? The banks, of course. But, remember that banks
like any other seller will not necessarily offer you the best rate unless
confronted with competitive offers or a well-informed customer bargaining for
deals. So, before choosing a lender, do a thorough research of all the options
available to you. It is wise to choose the lender who offers you a lower rate of
interest on personal loans with transparent and friendly terms and conditions.
Loans can be available at rates below bank card rates and hence, don’t shy away
from negotiating with your banker on rates, fees, and all other loan terms and
conditions.
- Figure out what you need: Interest rates generally depend
upon the tenure of repayment and the principal amount. So, the first step to
plan for a loan is to figure out the amount of loan you need and the time period
for which you need a loan. Different lenders charge different rates for
different repayment periods and loan amounts. You can use online tools such as
Personal Loan EMI calculator to check how much you need to repay every month on
your personal loan. You can also compare the interest rates of various lenders.
So, you can adjust the parameters of tenure, loan amount and interest rates to
reach an optimal EMI that you can afford.
- Check your credit score: Before applying for a personal loan,
it's better to check your credit score. Given that these are unsecured loans,
the risk involved is much higher for the lender. Hence, the lender will favor
the applicants with a higher credit score as it indicates better repayment
capacity of the borrowers. A credit score of 650 and above will give you a good
chance of getting a personal loan with a lower interest rate and good terms. To
improve your credit score, start paying your bills on time and use your credit
card as less as possible.
- Search the internet: You may find the best interest rates on
the internet. There is an increasing number of fintech lenders on the internet.
Their overhead costs are lower than that of banks, so it is possible for them to
offer lower rates and better terms & conditions. Similarly, online marketplaces
are authorized by banks to run special schemes for the customers who are not
available through other channels like a branch or an agent. These marketplaces
also offer attractive cashback and discounts to the customers which
significantly reduces the cost of a personal loan. Hence, compare, compare and
compare is the mantra to be able to take a well-informed decision.
- Read reviews: Before choosing a lender, reading other
peoples’ experiences with them is the right way to avoid mistakes or wrong
decisions. Google the lender’s you are considering before you sign the loan
agreement, just to see if there is anything positive or negative you should
investigate. User reviews aren't infallible, of course; use them to raise
questions that you need to be answered.
- Check all the terms and conditions: Before opting for the
personal loan, it’s better to check all the terms and conditions attached to it.
Apart from interest rates, check for prepayment charges, late penalty charges,
insurance requirements, interest reset clauses or processing fees as these
hidden charges can inflate the total cost of the loan. So, read the terms and
conditions of your loan agreement carefully; do not rely on the bank’s
executives for all the details. Do your research and make a smart choice.
- Choose a personal overdraft facility: If your loan
requirements are fluctuating, you have the option to choose a credit line
personal loan which works like an overdraft account. With an overdraft facility,
you are not required to pay interest on the money you haven’t withdrawn from the
overdraft limit. Hence, you pay interest only on the loan amount utilized and
save on your interest outgo. There is also flexibility when it comes to
repayment. You can pay within days, weeks, or months- whatever suits you. An
overdraft account comes with a maximum tenure of 1 year. However, it can be
renewed easily.
Conclusion: As you shop for personal loans, being mindful of
the above tips can help you get the personal loan at low rates. Strive to
improve your credit score and follow the above-mentioned steps to make an
informed decision.
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