Financial challenges can come at any stage in life. Many a time, people are not prepared to deal with them. Personal loans can help you meet your current financial obligation with ease. You can choose to repay the borrowed amount through affordable EMIs. It makes the personal loan a very convenient credit tool. However, it’s crucial to note that lending institutions charge a higher interest rate on personal loans.
Read on to learn how to get an instant personal loan with a low-interest rate.
How does a personal loan work?
Personal loans are unsecured credit products offered by lending institutions to individual customers. The borrower doesn’t need to provide any collateral for the loan amount. However, they have to meet the minimum eligibility criteria set by the lender. The loan amount has to be repaid within the chosen tenure through EMIs on tenures of up to 5 years. Personal loans are ideal for short-term borrowing.
In today’s era, new-age lending institutions have a customer-centric approach. They focus on simplifying the process of getting a loan for the customer. Today, you can access loan products using the insta loans app. The loan amount offered through a personal loan varies from one lender to another. However, reputed lending institutions like Fullerton India can offer up to INR 25,00,000 as a personal loan. You can easily apply for the loan using the Fullerton India InstaLoan app.
How to get a personal loan with low interest?
There are many advantages of a personal loan over other credit products. For example, there are no restrictions on the usage of funds. In addition, personal loans don’t require any collateral from borrowers, making them more inclusive. However, the cost of borrowing funds through a personal loan is higher than other loan products like housing or property loans. A higher interest rate can be a significant deterrent for borrowers. It can increase their total outstanding amount and EMIs. However, there are ways to get a personal loan at a low-interest rate. Let’s take a quick look into factors influencing the interest rate for personal loans.
- Income of the loan applicant
The first and most crucial factor influencing the interest rate for personal loans is the applicant’s income level. A salaried employee working at a reputed organization can easily get a low-interest personal loan. A higher income can translate into a higher repayment capacity when debt obligations are low. Therefore, it can also reduce the interest rate. It happens because the risk for lenders is lower.
- CIBIL score
Maintaining a high CIBIL score is a great way to get amazing deals on personal loans. It can help lower the interest rate as your creditworthiness is higher. It is highly recommended to maintain a credit score over 750 to get the best interest rate on a personal loan. The CIBIL score is a crucial measure of your creditworthiness, and all borrowers check the CIBIL score before lending funds.
- Pre-approved loan offers
Reputed lending institutions have pre-approved loan offers for their loyal customers. If you already have an account at a lending institution, they might have some pre-approved loan offers for you. Since pre-approved loan offers are only given to trustworthy customers, the interest rate is lower than usual.
- Lower the debt-to-income ratio
The debt-to-income ratio measures the percentage of your total monthly income used to meet the debt obligations. For example, if your monthly income is INR 1,00,000 and you pay an EMI of INR 25,000 every month, the debt-to-income ratio is 1:4 or 25%. Lowering the debt-to-income ratio by paying off existing debt is a great way to lower interest rates on new personal loans.
- Develop a healthy relationship with the lender
Developing a healthy relationship with the lender can help you get better deals on a personal loan. The right approach to achieve this is by opening an account with the lending institution and maintaining a healthy transaction flow.
- Look out for special offers
Many lending institutions have special offers for their customers during the festive seasons. Looking out for such special offers can help you find a lower interest rate on personal loans.
- Compare interest rates offered by multiple lenders
A quick way to find the best personal loan deal is by comparing different lenders’ interest rates. However, it is essential to factor in other costs, such as processing fees and prepayment charges, before finalizing the loan provider. You can easily do this by downloading the best loan apps in India or visiting lenders’ websites.
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