Life is full of unplanned events. These unpremeditated expenses need fund support in terms of personal loans. These collateral-free loans are easier to get and needs minimum documentation. Hence a popular mode of capital support among borrowers.
Despite easy loan processing, a significant challenge for availing personal loans is its higher interest rate that remains generally higher than home loans because of its unsecured nature.
So, if you need an affordable personal loan, this blog will help with relevant information about ways and deciding factors to get good deals on personal loans from top lenders. Refer to the passage and use it for financial emergencies such as weddings, medical emergencies, home repair or renovation, and many more such requirements.
A Good Credit Score
Your credit score should be 750 or above. If there are ongoing loans, dues or debts, clear them off to increase credit score. With an improved credit score, there are better chances of getting an attractive deal for personal loans.
Tips for higher credit score
Credit utilization ratio under 30 percent, avoid hard inquiries for credit cards, home loans, personal loans, and others, a regular update on credit score, etc.
If you are a co-signor or guarantor of other loans, ensure timely repayments because delays in those loan accounts also impact your credit score.
Favorable Repayment History
Financial transaction history is a crucial determiner for lenders to provide you good deals on personal loans. Clear off all credit card bills and other debts, pay EMIs timely every month. A disciplined financial history and repayment history helps in getting affordable interest rates and flexible repayment terms.
Almost all banks and financial institutions have announced deals and slashing of interest rates for a limited period during the festive season. The festive loans from SBI, Interest rate discounts by ICICI Bank, HDFC, Yes Bank, etc., are providing lucrative personal loan offers.
These festive offers can save a lot of money on interest rates and loan amounts payable during the loan tenure. Check comparison websites and analyze all offers from leading financial institutions.
You can also use your long relationship with the bank to get favorable festive discounts and cheaper interest rates.
Interest Calculation Procedure
Interest calculation methods vary from lender to lender. You might get a lower personal loan interest rate from a lender but pay more loan amount during the loan tenure because of the difference in the interest calculation procedure.
Banks and Financial Institutions apply primarily two methods for calculating the interest rate on your personal loan.
Flat Rate: Interest rate charged on the full loan amount throughout the repayment tenure
Reducing Rate: Interest rate applied on the outstanding principal amount, with the amount gradually decreases with equated monthly installments
Ask your lender and decide the best one for your financial security.
Blue chips and multinational corporations bring trust and credibility. Lenders provide
favorable personal loans for employees of such business houses. The reasons are a steady flow of income, the reputation of the company, and the ability to timely repayment.
People employed with Government Departments, PSU, Central Institutions, Quasi-Government Organisations get personal loans easily and with attractive deals.
Lenders consider your stability at work and permanent address before sanctioning the personal loan. You need to have at least two years of working history with one year at the current employer to get favorable personal loans.
You must reside at the current address for a minimum period of time, decided by the lender.
Disclose All Income Sources
Lenders need to assure your repayment capacity, so, they analyze your income resources and financial history. Come clean on all income sources such as rent, freelancing job, salary, etc.
Do not hide any debts or loan/s, because with PAN and Aadhar lenders can easily check all your financial liabilities, and it could cause rejection of the personal loan application.
If you furnished all the income details clearly and sufficient for the personal loan requirement, lenders would feel more confident to offer you affordable personal loans.
Relationship with the Lender
It is advisable to maintain an old account with a bank or financial institution. Lenders feel confident to provide convenient personal loan offers to their loyal and old customers. They have your financial history, know you personally, so there is already trust factor and reliability.
Leading public sector banks, private sector banks, and NBFCs prefer their existing customers for lending personal loans with attractive interest rates and flexible repayment options.
Apply with a Co-borrower
Apply with your earning partner to reduce or share the financial burden of loan repayment and EMIs. Co-borrower helps in getting lucrative personal loan offers and improves chances of eligibility with quicker loan processing.
How to manage your personal loan efficiently?
Borrow only the required amount, not eligible amount
Financial plan considering payments throughout the loan tenure
Timely EMIs payments, do not delay and avoid penalties
If the lender agrees, make more payments than EMIs
Make part-payments and lumpsum payments whenever got sufficient funds
Use Bank and NBFCs applications to track payment status, due amount, etc
Personal loans could be a stress-free and straightforward process if you follow the above-mentioned tips and steps. Though interest rates are higher, they could be reduced significantly with smart planning and sound financial background.
Be disciplined, clear off debts on time, and keep your credit score above 750 to get desired personal loan offers. Check your eligibility on the personal loan EMI calculator and compare different personal loans on the web and choose the best one for your fund requirements.