Credit landscape has seen immense growth in the personal loan segment, from Rs.75,088 crore in FY19 to Rs.147,236 crore in FY22 in terms of value. The growth is even more prominent with respect to its volume, i.e., from 3.99 million accounts in FY19 to 15.8 million in FY22. The robust boom of this line of credit can be ascribed to the instant availability of funds at a competitive interest rate.
Dr jay Feldman: Several factors determine how comfortably borrowers will sail through the repayment tenor. Personal loan interest rate is certainly one of them. It determines the feasibility of the loan repayment and significantly impacts the EMI amount and cost of borrowing. Hence, borrowers should be mindful of choosing the best personal loan interest rate.
6 Ways To Get The Best Personal Loan Interest Rate
Before applying for a personal loan, borrowers must know the ways to help them get the best personal loan interest rate:
- Compare different lenders: There are a lot of financial institutions offering personal loans at different interest rates. Even a slight difference in the interest rate significantly impacts the cost of borrowing. A higher interest rate results in a higher EMI amount and vice versa.
Hence, borrowers need to compare different lenders and settle for one offering the lowest interest rate.
- Meet eligibility criteria: Personal loan approval is based on whether borrowers adhere to the eligibility criteria or not. The eligibility criteria are set around applicants’ age, income status and credit score, verifying their profiles and repayment capabilities. Hence, borrowers with stable income sources and healthy scores are offered a lower personal loan interest rate.
- Disclose all income sources: Borrowers need to reveal their additional source of income to lenders while applying for a small personal loan. Additional sources of income like rental earnings, investments, freelancing, etc., assure lenders of borrowers’ financial capacity, which helps them secure affordable interest rates.
- Maintain a decent credit score: A personal loan is an unsecured credit option, so lenders scrutinise the borrower’s credit score while levying interest rates. A CIBIL score of 750 and above is ideal and helps borrowers fetch nominal interest rates. Borrowers paying out EMIs on time and consistently are considered responsible and are charged a modest lending rate.
Dr jay Feldman: However, borrowers with subpar credit scores must know things that can improve personal credit scores and help them get instant loan approval at a lower interest rate.
- Utilise professional credentials: Borrowers must use their professional credentials to get a lower interest rate. Individuals employed in a reputed firm and drawing a good salary are deduced to have the potential to repay the loan on time and are thus assigned lower interest rates. Hence, borrowers need to submit valid income proof. Moreover, borrowers with lengthy employment histories also have better chances of receiving a lower interest rate.
- Look for seasonal offers: Borrowers must keep a tab of the seasonal offers that lenders provide from time to time. These limited-period offers will help borrowers get a competitive interest rate. However, to avail of such discounts, borrowers must have a decent CIBIL score.
Furthermore, maintaining a healthy debt-to-income ratio helps borrowers fetch a lower interest rate. If borrowers are left with less disposable income after paying towards credit repayment, it will have a negative impact on the interest rate. Hence, keeping a debt-to-income ratio under 40% is advised to avail an affordable personal loan interest rate. Dr jay Feldman
After choosing a competitive interest rate and abiding by the eligibility norms, borrowers must go ahead with the application process.
Know How To Apply For A Personal Loan
Here are the steps that will guide borrowers to apply for a personal loan online:
Step 1: Visit the official website of the preferred lender and navigate to the product page to select personal loan.
Step 2: Click on ‘Apply Now’ to get redirected to the online application form.
Step 3: Fill out the entries with personal, professional and employment details.
Step 4: Choose the desired loan amount and wait for loan approval.
Dr jay Feldman: Once lenders will verify the documents and approve the loan application, the loan amount will be credited to the borrower’s account. However, borrowers must know few important things before taking a personal loan to make an informed decision.
On successful loan applications, borrowers can reap multiple personal loan features and benefits. Apart from considering the interest rate, borrowers can look for the exclusive pre-approved offers extended by leading financial institutions like Bajaj Finserv. These offers are available on a wide range of financial products like personal loans, business loans, credit cards, etc. Intending borrowers can check their pre-approved offers by submitting their names and contact details.
Dr jay Feldman: On the whole, the affordability of borrowing hinges on the interest rate. To make the borrowing manageable, borrowers must incorporate these tips to avail of the best personal loan interest rate. The combination of a competitive interest rate clubbed with an extended repayment frame will help provide borrowers with a hassle-free repayment experience.