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2 mins Read | 4 Years Ago
How to obtain a Personal Loan at a low interest rate?
Before your Personal Loan is granted, lending institutions look for various factors like the loan amount you need, your employment history, credit score, repayment capacity and more. Interest rates for such loans tend to be higher than those applied on Home and Auto Loans.
So, getting a Personal Loan with minimum interest rates becomes crucial. But how does one obtain it? Here are six ways to answer that.
1. A good credit score is important
To have a good credit score, you’ll have to pay all your dues and debts on time. If the credit score is 750 or above, your chances of obtaining the Personal Loan increases significantly.
All you have to do is maintain a good credit utilisation video (ranging within a 30% limit), avoid Credit Card applications and direct loans, observe your credit report and retain a good mix of both unsecured and secured loans.
Also ensure timely repayment for your co-signed loan account, as missed or delayed payments can affect you and the primary borrower’s credit score.
2. Maintain a clean and good record of repayment history
If you have any Credit Card bills, try to pay them in full. Clear off your debts every month. If you have any other existing loan, make sure you pay the EMIs on time.
This will get you the best Personal Loan deal in future, as your lenders will trust and rely on you because of your good repayment history. It will also help you negotiate the interest rates with the lender.
3. Compare Personal Loan interest rates and watch out for seasonal offers
Depending on your personal loan eligibility and requirement, explore online financial marketplaces where you can compare various lending institutions and their rate of interest on Personal Loans. Moreover, pay attention to your existing lender.
They mainly offer Personal Loans at comparatively lower interest rates and helpful service as you have been on good terms with them. Also, watch out for interest rates during festive seasons, as popular banks like ICICI often launch attractive seasonal offers for Personal Loans. The best time to get such offers is during Diwali.
4. Consider your Employment history
To get the lowest possible interest rate for a Personal Loan, you’ll need a good credit score.
To have a good credit score, you’ll need to maintain an excellent FOIR (Fixed Obligation to Income Ratio) and job stability. Several times before granting the loan, the banking institution needs some Personal Loan documents. One such important document is your salary slip, which represents your employment history.
It’s essential to have at least two years of employment history, including one year of work with the current employer. Banks prefer to grant Personal Loans to individuals employed with the Central or State government, Quasi-government or PSUs. Your financial stability and reputation as an employee play a key role in determining your Personal Loan’s interest rate.
5. Employer’s credibility
If you're currently working in an MNC or a reputed company, the chances are that you’ll get the most favorable Personal Loan deals. The reason is simple: such an employer’s capability to provide you with a stable job is higher than other employers.
Working in such a company will give your lender the impression that you’ve got a steady income and you’ll be able to pay your EMIs on time.
Conclusion
This comprehensive guide must have given you a decent idea of how to obtain a Personal Loan at the lowest possible interest rate. However, you must check the offers and service terms offered by top lenders like ICICIBank, to make an informed decision.
