As against the previous norms that required lengthy processes for personal loan approval, today, these loans are available in durations as short as 24 hours. Their quick availability makes these loans suitable for financing emergency funding needs too. Not to mention, their use comes with zero lender-specific restrictions.
Today, finding the lowest rate personal loan offer is not much of a challenge as well. However, securing the best rates that keep your repayments affordable requires some digital legwork.
Important Things To Know For Availing Low-interest Personal Loans
Interest rates on personal loans are remarkably impacted by borrower-specific financial factors. It is thus best to know and keep the following things in place to secure a personal loan with the lowest rate of interest:
- EMI affordability
When applying for a personal loan, it is crucial to check if the amount sought keeps the EMIs affordable as per your income or not. When assessing personal loan applications and the risk involved in lending, lenders check the repayment capacity of the borrower based on certain factors.
For instance, the fixed monthly liability you are currently servicing towards any existing credit acquires a portion of your monthly income. It thus leaves you with lesser disposable income for additional repayment accommodation. It is ideal to keep such fixed liabilities, including for any new loan being availed, under 50%. Also, you must not utilise more than 30% of your total available loans and advances, which indicates your credit dependability.
Before applying, make sure to use a personal loan EMI calculator online, which should help you choose a suitable loan amount that keeps EMIs affordable based on your income. Also known as an interest rate calculator, it is designed to compute other crucial values like the total interest payable and amortisation schedule as well. Applying for a loan based on these numbers should help your cause of securing the lowest rate personal loan.
- Credit score and past credit behaviour
When it comes to unsecured advances like instant personal loans, a credit score assumes remarkable importance. A 3-digit number allocated to any individual or entity who/that has dealt with loans and advances previously, a credit score is an indicator of one’s good or bad credit behaviour in the past. Lenders enquire about your credit score to check if you have been consistent with your past repayments and practised financial discipline or not, thus assigning the risk involved. A credit score of 750 or above indicates a low-risk borrowing profile, thus allowing lenders to approve the lowest rate personal loans.
When applying for a personal loan, it is advisable that you check out things you can do to improve your personal credit score to secure favourable terms on the advance.
- Current monthly income
Your current monthly income is one of the pertinent factors that affect your personal loan interest rate. It is a measure of your current financial standing and your ability to repay the advance in time without any delay.
Lenders often require you to meet a minimum monthly income requirement, which varies per your city of residence, for the purpose of personal loan financing. The minimum threshold often starts with Rs.22,000 as a monthly income. You must confirm with your lender the minimum income requirement for a personal loan and check if you meet it before applying.
Further, if you hold additional income sources, it is important to document all such sources when applying. This should represent a higher repayment capacity, thus helping secure the best rates.
- Employment stability
Your years of employment and the employer’s reputation are other two factors that hold importance when it comes to securing the Low Personal loan Rate. Some best lenders require applicants to be employed with an MNC, a public company, or a private firm for the purpose of availing of a personal loan.
Further, you must be employed for at least a year with your current employer when availing of a personal loan. The availability of personal loans for government employees is only further simplified due to job stability.
Relations with the lender also come into the picture, weighing your chances of availing a personal loan at favourable rates. Existing customers often get the perks of easy approval as well.
For instance, with Bajaj Finserv, customers can experience hassle-free and quick loan processing through their pre-approved offers on several financial products, including personal loans. You can check your pre-approved offer by providing your name and contact details only.
When applying for a personal loan, make sure to check if you meet all eligibility requirements. Keeping all requirements laid down by your lender in check can work favourably for you when seeking to avail of the lowest rate personal loan.