A Personal loan is a type of unsecured loan that you can borrow from a bank or financial institution if you require funds to pay for your financial needs. You borrow a loan when you require credit. Once you submit your loan application to a lender for a personal loan, the lender verifies and approves it. Post this, the loan amount is disbursed into your bank account. Once you receive the loan amount, you will need to repay the lender via EMIs for the loan repayment tenure.
Interest is the amount of money a borrower pays to the lender for the privilege of lending him money. It is calculated as a percentage on the principal amount, and is represented as Annual Percentage Rate or APR.
A personal loan is an unsecured loan where the borrower does not keep any person or any of his assets as a guarantee. That is why interest rates on personal loans are higher compared to secured loans. One must always know how to keep in check his personal loan interest so that later he is not burdened with repayment dues.
Therefore, here are some steps you can follow, and restrict yourself from doing to ease the interest rate charged.
Build up your credit score –
The credit score of a person is equally proportional to how responsible he/she is in paying bills on time, paying debts on or before time, having unpaid debt, and avoiding purchases of larger sums on credit cards. A good credit score implies that you are a responsible person, builds the lender’s trust and you can have a significantly lower personal loan interest.
Use an interest rate calculator –
Although the information provided may seem apparently good such as tenor, interest rate, credit amount, principal amount, etc., you must use a personal loan interest rate calculator before finally choosing your lender.
Compare interest rates by different lenders –
Different lenders offer lucrative deals with different interests. Many NBFCs like Bajaj Finserv offer lower interest rates compared to banks. Similarly personal loan apps are on the rise that have relaxed personal loan interest. You should always compare your interest rates before availing.
Apply for a higher amount than required-
Some think it is better to avail for a higher quick loans amount so that later due to any mishap there isn’t a shortage of funds again. This is, however, not advisable. It is better to apply for as little as possible. Because lower the principal amount, chances of lower interest rates prevail.
CIBIL Score –
Credit score and CIBIL scores are slightly different. Between CIBIL and credit score, the main difference is that credit score may be obtained from any of India’s four credit bureaus. However, only CIBIL offers a CIBIL score. Any of the four credit bureaus’ scores are equally legitimate.
Your credit score should be above 750 to get really good interest rates. There are many ways to increase your CIBIL score.
Don’t miss out on special offers –
Often during the time of special ceremonies all over India, such as during festivals, holidays like Independence Day, Christmas, New Year, and also during seasons when there is a lot of wedding ceremonies inaugurated, or during the beginning of new academic year, at many special occasions, banks and financial institutions offer lucrative interest rates to attract customers.
Always take time to read the fine print –
Before giving your final signature on documents, always take time to read through the legal documents carefully. Many miss this you should not. Reading all the terms and obligations carefully will prevent you from getting an unwanted surprise of upfront interest charges, insurance premium, etc.
Pre-approved offers are available on a wide range of products from Bajaj Finserv, like home loans, credit cards, and personal loans. Submit your name and contact information to see what offers are available to you.
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