Unsecured lending (including credit card and personal loan) portfolio is growing. Personal loan has become a highly demanded product and avail is anyone having good or bad CIBIL. But the problem is if you compare the personal loan with a car loan, home loan or business loan, you find that the interest rate of the personal loan is always on the higher side. You toned to get them at a lower rate of interest because they are collateral free and best to meet the urgent cash needs. Here are some ways that you might not know how to get a personal loan on a lower rate of interest.
So, let’s look at 5 ways to secure personal loans at a lower rate of interest.
1. Maintain a good credit score
Generally, a score of 750 is considered an excellent credit score and if it improves further, then it’s a better chance of getting a good deal on the personal loans. But if your credit score is low, then there is a chance that you will be offered a higher rate of interest on personal loans. So instead of going for a higher rate of a personal loan try to improve your credit score if there is not an urgent need. However, improving a credit score is easy you can improve it by following these ways.
- Clear off your dues on time
- Check your credit score at regular intervals.
- If you’re a guarantor or co-signer in any loan, then make sure that the repayment is being done on time.
|
CIBIL Score |
Grade |
|
750+ |
Excellent |
|
700-749 |
Good |
| 650-699 |
Fair |
|
550-649 |
Poor |
| 550 & below |
Very Poor |
2. Maintain a good repayment history
Before making any offer, financial companies always look into your credit history. So if you have a bad repayment history, then corrects it to avail the personal loan at a lower rate in the future. To achieve a good repayment history, make sure you always pay your credit bills or EMIs on time. This will not increase your chance of getting a personal loan higher rate of interest, and you will not pay any penalties.
Assume you want to take SBI business loan or SBI personal loan and you have a good payment history then there are chances, you will get loans on a lower rate of interest rate.
3. Compare interest rate and look for seasonal offers
As per the loan eligibility criteria set by the lender and your requirement, a borrower should look for better interest rate offerings. To do this, you can go to an online fin-tech marketplace. These financial marketplaces provide various kinds of information like offers from different lenders, their interest rates, and processing fees. By looking at this information at one place, a borrower can easily choose the best personal loan with a lower interest rate.
Another way to find this is that you can wait for the festive season to come because many financial institutions provide better deals on personal loans. You can also look for pre-approved offers from your existing lender.
4. Credibility of the employer
Employees who are working with reputed/blue-chip companies, multinational companies may get better deals on personal loans. The reason behind this very simple because from a lenders perspective it is less risky to offer a personal loan to an employee of a credible employer than of a less credible employer. Therefore, some banks and NBFCs provide personal loans to government employees because the job of a government employee is more stable than a private employee. This is the reason that employees working with a credible employer get a lower interest rate on personal loans.
5. Your employment history
Lenders mostly look for job stability, residential stability to offer personal loans on a lower rate of interest. If a person is stable in his job, then chances are he will get a good offer from the lenders as compared to the person who is unstable. That’s why some banks look for an employment history of at least 2 years and 1 year with the current employer. Some institutions also look for repayment capability, fixed income, and customer profile to offer you a good interest in personal loans.
The bottom line is, moneylender feels insecure for providing a personal loan because this is an unsecured form of loan. Therefore, he looks for the various aspects before making an offer be it credit score, repayment history, employer’s credibility, and the employment history. If you fulfil any of these, surely you will get a good offer from the lender.