By following these tips, you will be able to get a personal loan at a lower rate.
Maintain a good credit rating: Those with a credit rating of 750 and above have a higher chance of getting a loan. Such consumers are considered to be more financially disciplined and therefore carry less credit risk for lenders. Lenders can also offer preferential interest rates to loan applicants with higher credit ratings.
Gaurav Aggarwal, Senior Director of Paisabazaar.com, said: “Follow healthy credit practices such as paying off your EMI and credit card bills on time, limiting your loan utilization rate to 30%, monitoring credit accounts guaranteed or signed by you, avoiding multiple loans or credit card applications at short notice and maintaining a healthy credit balance to build and maintain a high credit rating. “
Aggarwal added: “Get in the habit of checking your credit report regularly, ideally at least once every three months. This will give you enough time to take corrective action as needed to improve your credit rating. This process will also allow you to identify and correct incorrect information or technical errors. A revised credit report will automatically increase your credit score. “
You can receive one free credit report each year from each credit bureau. Moreover, you can also get free credit reports from the financial markets on the Internet.
Maintain good banking relationships: When considering getting a personal loan, you should inquire with banks and non-bank financial companies (NBFC) with which you already have client relationships.
Among the many lenders offering loans to individuals, many tend to provide loans to individuals at favorable interest rates to existing customers. Such banking relationships can take various forms such as checking, savings, payroll, fixed / recurring deposit accounts, or existing loans or credit cards.
Hence, those looking to obtain a personal loan should start their search by first contacting the bank and NBFC with which they share an existing banking and credit relationship. The interest rates and other loans they offer can then be used as a benchmark to compare the interest rates on personal loans of other lenders.
Comparison of interest rates: In today’s digital world, it has become easy to compare interest rates on different loan offers from different banks and NBFCs. Therefore, you must do proper research work before applying.
Aggarwal said: “Given that many banks and NBFCs offer loans to individuals, their interest rates can vary widely, from 10% to 24% per annum. Since the process for assessing creditors’ creditworthiness and risk appetite may also differ, the chances of getting a personal loan approved and the interest rate charged will also differ for different lenders. Therefore, those planning to take advantage of personal loans should compare offers from as many lenders as possible before focusing on any particular lender. ”
However, when comparing different loan offers for individuals, one should not compare only the interest rate. You should also evaluate other characteristics of the loan, such as processing fees, loan amount, maturity and prepayment fees, before entering into an agreement with a specific lender.
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