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7 Ways to Get the Best Rate of Interest on Personal Loan

  By : , New Delhi, India       8.10.2018         Phone:9716171569          Mail Now

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:

- Donít 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, donít 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 peoplesí experiences with them is the right way to avoid mistakes or wrong decisions. Google the lenderís 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, itís 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 bankís 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 havenít 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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