How often have you found yourself stuck at crossroads because you are not sure what to do next? When it comes to our finances, many of us struggle to manage them properly, especially when faced with unexpected expenses or unforeseen circumstances.
Whether you want to take out a Personal Loan to pay for an emergency, fund your vacation, a car repair, or pay off some credit card debt, you must make an informed decision before taking any action.
It all starts with choosing the right lender, one of the most essential decisions to make the process seamless and get the best interest rate on your loan. Generally, the Personal Loan interest rate ranges from 9.99% to 16.49%.
You should note that Interest rates vary depending on the lender and the type of loan. Many factors affect the interest rate, such as income, credit score, employment status, etc.
To receive the best Personal Loan interest rate, you can use some of these clever strategies.
What are the best approaches to getting the best Personal Loan interest rate?
1. Compare interest rates
Finding the best rate on a Personal Loan by comparing the interest rates of different lenders is one of the most efficient methods. Several online platforms can help you find the current interest rates at various financial institutions. Once you have determined which rates are currently being offered, you can move forward with comparing them to find the best one.
Comparing rates also ensures that borrowers get the most out of each loan and will not get caught up in unnecessary fees or penalties.
With some lenders like Poonawalla Fincorp, getting a Personal Loan is simple and quick owing to straightforward eligibility conditions, competitive interest rates that start from 9.99%, and an entirely digital application procedure.
2. Fixed vs Floating interest rates
There are two types of rates – floating and fixed. A floating rate is an adjustable rate where the interest rate keeps changing according to the existing market conditions. On the other hand, a fixed rate does not fluctuate according to market trends, making it more reliable. To further understand how these interest rates work, borrowers can utilise a loan EMI calculator.
3. Build and maintain a strong credit score
An individual’s credit score is one of the factors that determine their access to finances. It helps determine which types of loans you qualify for, including Personal Loans. Lenders are more likely to lend money to those who can repay their debts.
A minimum credit score for Personal Loans can help a person get lower interest rates on Personal Loans than someone with a poor credit history.
A great way of building (or rebuilding) a credit score is to avoid defaulting on loans. Once you have obtained a loan, do not miss payments; doing so can hurt your credit score and, further reduce your chances of receiving additional loans in the future.
4. Look for offers given by lenders
Various lenders provide seasonal promotions during which applicants can take advantage of benefits like lower Personal Loan interest rates. This means that if you have previously borrowed from or been in contact with a financier, you can qualify for pre-approval.
5. Meet the eligibility requirements of the lender
To get the best rates, it is essential to choose a lender with straightforward Personal Loan qualifying requirements. Complex eligibility requirements may make it more challenging to get your loan application approved. The eligibility requirements for borrowers vary amongst lenders, so, always check the qualifications set forth by various lenders.
Poonawalla Fincorp’s Eligibility conditions include:
- The person needs to be an Indian citizen who is at least 22 years old when applying for the loan and 58 at the end of the tenure.
- Applicants must be working full time, and their minimum monthly salary needs to be ₹20,000.
- Applicants must have at least one year of job experience, with at least two months of consistent employment at their present job.
Personal Loans are often seen as a way to tide over financial emergencies, but they can come at a price if you don’t have all the relevant information.
While Personal Loans can be beneficial for those who want debt consolidation or a significant amount of credit, they can also be expensive and stressful if you are not aware of your financial position or meeting lenders with only half the information.
Therefore, it is crucial to know the pros and cons of taking out a Personal Loan before signing on the dotted line. Remember to choose a reliable lender and evaluate its credibility, interest rates offered, processing fees, foreclosure fees, and other fees.