Instant loans are rapidly growing financing tools preferred by borrowers of all segments. Today, you can apply for a quick loan through a loan app and the money gets credited into your account in a day or two. The eligibility criteria are simple and documentation requirements minimal. However, one thing that you must check thoroughly before availing a personal loan is the interest rate.
Personal loans are infamous for high-interest rates. However, that’s not completely true. You can avail a personal loan at a much lower interest rate if you know a few tricks. These days you can avail a personal loan at a much more affordable rate, especially through a loan app.
Read on to discover these lesser-known tips to avail a personal loan at a low-interest rate.
Tips to avail a personal loan at low-interest rate
Check and match the eligibility
To get a competitive interest rate on your personal loan, you must fulfil the lender’s eligibility criteria. Not meeting the eligbility criteria will result in loan rejection or approval with a higher interest rate. However, if your profile surpasses the eligibility requirements of the lender then they are more likely to offer you a lower interest rate. So, compare different lenders and go for the one with minimal eligibility requirements.
Do comparsion shopping
Before availing a personal loan, make sure to conduct thorough research. Check out all the lending options you have. Compare the interest rates, fees and eligibility criteria. There are many loan comparison websites to help you. Also, check out the loan apps.They may offer you a loan at a reduced interest rate. Pick a reputed lender with low-interest rate and good customer service. Also, knowing the market rates will help you negotiate a better deal with your lender.
Maintain a good credit score
A good credit score is an indicator of your creditworthiness. A high credit score reflects your financial integrity. This is an assurance for the lenders as the chances of you defaulting on the repayment is low. As a result, the lender may offer you a personal loan at a much-reduced interest rate. You can also negotiate with your lender if you have a strong credit score.
Clear your existing debts
The lower the current ongoing debts, the easier it is for you to negotiate a lower interest rate on your personal loan. This is because if you already have large pending dues or loans, then your lender doubts your repayment capability. They may either reject your loan application or approve it at a higher interest rate. So, clear your existing debts before applying for a new loan.
Look for seasonal offers
More often than not, financial institutions offer discounts or rebates on the interest fee during the festive and holiday season. This is a commonly used marketing technique to attract customers. You can plan your goals and try availing a personal loan during these seasons. You should also look for corporate offers or check out the loan apps.
Pre-approved offers
If you are an existing customer or have transacted with them before, check for pre-approved offers. Financial institutions give out pre-approved loan offers where they are ready to give you a loan based on your borrowing profile. These pre-approved offers usually come with a nominal interest rate.
Employment benefit
Your employment details can also help you get a lower interest rate on your personal loan. People working in reputed government organisations or MNCs are seen as less risky borrowers. This is because they have a stable source of income. Likewise, self-employed with established businesses are more likely to get affordable loans.
Interest calculation
The calculation of the interest that you pay on your personal loan varies from lender to lender. Some lenders offer loans at flat interest rates while others offer a reducedrate. Usually, reducing interest rates are more pocket friendly than flat rates. So, make sure you check with your lender and see how the interest is calculated.
Good relations and negotiations
You can leverage your relationship with the financial institute or tap into your network to get a better deal. Since your profile is known to them, it should be reassuring for the lenders to offer you a personal loan with easy and flexible repayment clauses.
Conclusion
Personal loans are typically unsecured loans. This means you do not have to pledge any collateral or security to avail a personal loan. All you need is to ensure that you meet the eligibility criteria of the lender. Also, the disbursal of personal loans requires minimal documentation, and once approved, the loan amount is transferred to your account instantly. The best part is you can use a personal loan to fund any cause, like a medical emergency, a wedding in the family, or renovating the house, etc. which makes it a smart borrowing option.
However, make sure that you have done thorough research to avail the loan at the lowest interest rate. Remember, even a slight difference in the interest rate can result in significant savings, especially for larger loan amounts and longer loan tenure.