A personal loan is a popular financing option in India, and availing it has become quick play as many lenders are offering personal loans on digital platforms conducting the complete process from application to sanction and disbursal online. Though one can get the funding instantly, since personal loans are unsecured, the interest rates tend to be higher. It is crucial to know how to get a personal loan at the lowest interest rate to have a smoother repayment experience.
- Maintain a high Credit Score
A good credit score is beneficial since it reflects the borrower’s creditworthiness and assures the lender of the loan repayment abilities of the borrower. It gives you a more substantial chance to negotiate with the lender and get the lowest interest rate. A high credit score can be maintained by timely bill payments and managing debt effectively. Financial institutions and lenders prefer a CIBIL score of above 750.
- Maintain a consistent repayment record
Bad loans lead the pathway for financial instability and prevent the lenders from lowering the interest rate. A healthy repayment record means all debts are paid on time. This increases the CIBIL score and strengthens your creditworthiness.
- Strong Professional Credentials
An applicant’s profile is considered when they apply for a personal loan. High salary and work experience in a reputed organization can help negotiate the lowest interest rates as there are lesser chances of default. At times, salaried employees may be considered less risky than self-employed ones and may be liable to receive a personal loan at a lower interest rate.
- Compare loan options from different lenders
It is essential to invest some time in comparing personal loan interest rates of various lenders. This can be done quickly using personal loan EMI calculators available online to check your eligibility, loan amount, EMI amount, and interest rate by comparing different lenders online. Investing time in researching will ensure that you select the lowest interest rate on your personal loan and be profitable by directly saving money.
- Consider the total cost of the loan
A lower interest rate may not always mean a loan at a low cost. Sometimes if there are heavy processing charges or the late payment penalty is high, the total cost of the loan might be significantly higher than earlier calculated. So, you must calculate the total cost of the loan borrowed and decide accordingly before accepting the offer.
- Have a good association with the lender
Suppose you are an existing customer of the financial institution when you apply for a personal loan. In that case, you can leverage that to get the lowest interest rate personal loan and better service terms.
- Avail special/ seasonal offers
At times, customers are informed of special offers on personal loans via SMS, emails, or phone calls. Lenders also release offers in the festive season. You should sign up to receive updates on such offers as they are usually valid for a short period and avail of the offer when it presents to lower the interest rate.