How can one increase their chances of getting a loan from any financial institution? Most of you will have to say that by pledging or mortgaging your assets like jewelry, house, or property as collateral or having a prosperous relative/ friend as your guarantor for the loan. But that is no longer the case. You can get a loan without submitting any security or collateral from a financial institution. A type of unsecured loan, such as personal loan, requires no collateral and has low-interest rates.
A personal loan is an instant solution in an emergency liquidity crunch. These loans are quickly disbursed and require minimal documentation. Therefore, they are the most suitable option in an emergency. When looking for the best Personal Loan, it is advisable to compare offers from multiple lenders. Moreover, with the help of tools like the personal loan EMI calculator, you can evaluate the best tenure for a given loan amount and interest rate so that your monthly instalment can be well within your budget.
Fullerton India’s personal loan interest rates range from 11.99% to 36% for salaried and self-employed. Interest rates depend upon various factors such as the repayment capacity, employment status, credit score, and income.
Here are Five Ways to Avail the Best Interest Rate in the Credit Market
1. Maintain a Good Credit Score
Credit score and interest rates have an inverse relationship. You can improve your credit score gradually by clearing your debt and pending dues. A score of 750 and above gives you a higher chance of bagging a good personal loan deal. A few ways to maintain a good credit score is by maintaining your credit utilization ratio within the 30% limit, checking your credit report regularly, avoid taking direct loan and credit card applications to lenders, and maintain a healthy credit mix. You should also keep a check on your guaranteed or co-signed loan account to ensure timely repayment, as delays or missed payments can harm the credit score of both co-signor/guarantor and the primary borrower.
2. Maintaining a Good Repayment History
To maintain a good repayment history, you must regularly pay credit card bills and clear off your debts. If you have any ongoing Equated Monthly Installments (EMIs), then they should be paid as per schedule. On-time payment of your debts and dues helps you bag a better credit deal in the future. The reason is if your repayment history is good, you will have a chance to negotiate on interest rates.
3. Compare Personal Loan Interest Rates and Offers
A little research will take you a long way in your search for best personal loans. Based on your loan eligibility criteria and requirements, customers should visit the online financial marketplace and compare loans to choose among different lenders. You must check with your existing lenders as they could provide personal loans at comparatively lower interest rates and favorable service terms.
4. Evaluate and Check the Interest Rate Calculation
The interest rate calculation differs from lender to lender, and thus, the total interest payable is different at the end of the repayment term. It is advisable to understand the method of calculation.
The lender has to offer you a loan at a flat interest rate or a reducing interest rate. In the case of a flat interest rate, the payment of interest is calculated on the entire loan amount. While reducing the interest rate, the payment of interest is calculated on the outstanding principal, where the payment of EMIs gradually reduces the principal amount. Therefore, availing a personal loan at a flat interest rate could cost you more than availing a personal loan at a reducing interest rate.
5. High Professional Credentials
If you have a good salary and work for a renowned public or private sector company, it makes you a favorable candidate in the lender’s eye. You can use this to negotiate a lower rate of interest. Your company’s good reputation assures the lender that you will have the financial means to make timely payments.
It is advisable to check what are the features of personal loans. One should review the service terms offered by different lenders before deciding on finalizing on any lender. Ensure your decision is based on the interest rate offered and also on loan terms, processing fees, prepayment charges, loan amounts, etc.