In 2020, getting a personal loan has become child’s play thanks to the many companies that now offer a personal loan. If you are thinking of getting a personal loan, but you are confused about how to get the best interest rate, then this article is for you.
In today’s article, we will tell you 4 steps through which you can ensure that you get the best rates on personal loans, let’s get started.
Have a Great Credit Score
Irrespective of which lender you choose, one of the first and most important criteria they consider for processing your application is your credit score. Your credit score is basically a number that is calculated taking 4 factors into consideration: the number of loans you have taken previously, your repayment history of previous loans, any missed payments that might have occurred, and your credit or loan utilization in the past. In India, two organizations are responsible for determining the credit score. The first is CIBIL and the second is Experian, both of which give you a score on a total of 900. Having a score above 750 is generally considered great and thus will allow you to get the best interest rate.
In simple terms, the higher your credit score, the better are your lending habits, and thus you will get preferred moreover others when applying for a personal loan.
Compare & Contrast Lenders
A quick Google search for getting an instant personal loan will give you access to at least 200 odd lenders, and thus it is obvious that there are plenty of options available to you. The second step to ensure that you get the best interest rate on your personal loan is to check and compare the offers presented by each of them.
For example, Money View which is one of the best personal loan lenders in India offers the lowest interest rate per month, while on the other hand, fintech players like Bajaj Finserv, Dhani, Tata capital, or any other financial institutions have an interest rate starting from 11.99% yearly. Thus, in simple terms, the more research you conduct, the better offers you will get and lower will be the interest rates.
To make things simpler, you can make use of a platform like MyLoanCare or PaisaBazaar to view the latest interest rates being offered by top lenders and then choosing accordingly.
Seasonal Offers
India is a land of festivals and festivals are the times when we spend the most and are thus in need of cash. Most lenders in order to attract the highest number of customers thus come up with seasonal offers where they offer very low-interest rates.
While a good way to check for these offers is just by keeping an eye on the lender’s website or official app during and before festive seasons, an even better way is to subscribe to their notifications and updates.
All you need to do is share either your email address or mobile number, and you will receive correspondence from the lender as soon as they have an offer going on.
This way, you can be on top of the best interest rates being offered in the market and thus avail of a loan when the rate and timing suit you best.
Maintain Noteworthy Credentials
Although credit score will often be treated as the holy grail when it comes to offering you the best interest rate on your personal loan application, there are many other factors that are considered to determine if you are a good borrower or not.
For example, if you happen to work at a well known public sector company and draw a high salary, lenders will often prefer you over others. The reason behind this being, the lender is well acquainted with the company and is aware that you withdraw a regular high pay from the company, thus ensuring to a certain percentage that you will back your loan on time.
On the other hand, if you happen to work at a private sector company and still take home a high salary, lenders might give you a slightly lower score since the guarantee of you getting the same salary consistently in the private sector is less, considering the volatility of the market.
Although this is not a hard and fast rule, you will learn this from experience, the same as I have.
Conclusion
Getting the best interest rate on your personal loan application is not rocket science. All you need to do is follow the four steps outlined here and make sure you chose a trustworthy lender, who not only has a good reputation but also credibility in the market, and you will be on your way to get the best interest rates on your personal loan application.