A personal loan is one of the significant financial tools available today to help you cover your multiple needs instantly. If you have the required personal loan eligibility, a bank or lender may sanction an amount as higher as up to Rs.25 lakh.
The loan processing is swift, and you don’t need to give any reason for applying for it. However, despite having the loan eligibility, many people don’t apply for it because of the higher personal loan interest rate.
What’s more, the personal loan interest rate fluctuates as per one’s financial profile and eligibility. Hence, if you are not applying for it due to higher personal loan interest rate, here is a post to help you know some factors that may affect it.
Knowing about the same will give you time to work on all such factors to get the personal loan at a low-interest rate. Read on!
These Factors Affect Your Personal Loan Interest Rate
Your Income Level
You may find it strange, but the truth is that the higher is your income; lenders will award you the personal loan at a low-interest rate. Let’s say if you are earning Rs.50,000 in a month, the personal loan interest rate will be between 16-20%. Similarly, people earning more can negotiate with a lender for a personal loan at a low interest rate.
Your Credit History
Your Credit history is also one of the major factors while awarding you a personal loan interest rate. To be eligible for a personal loan, you need to have a robust Credit history because it reflects your past repayment behaviour. If you have paid your existing loan EMIs and credit card outstanding on time, you should get a personal loan at a low-interest rate. The best thing will be to check out your CIBIL Score before applying so that you can work on it if it’s not right and get a lower interest rate.
The Reputation of The Company You Are Working With
The reputation of the organization for which you are working is another factor that will influence your personal loan interest rates. The more reputed and stable is your company; the lower will be the applicable rate of interest on your personal loan. Applicants working with a reputed firm have lender’s backing for a lower rate as they know that such people are stable and won’t default on the loan repayments. Even if you are not working for A-list companies, try to have a long and stable employment history to get some rebate in personal loan interest rate.
Your Relationship With The Bank or Lender
Many of us tend to open a savings account, fixed deposits, credit cards and other accounts with one bank or lender, becoming its loyal customer. Due to the relationship that we have, there is a chance to grab a personal loan at a low interest rate. Being an old customer, you may have the upper hand in grabbing a lower rate on the personal loan as your bank would not want to lose you to another bank.
A personal loan is a blessing in disguise for salaried class people to cover their multiple needs without bothering about borrowing from relatives and friends. The only thing is opting for a personal loan at a low-interest rate to pay reduced EMIs. Going through the discussed tips would have given you an idea of how to go about it.