Let’s face it! Who does not want a low interest rate while applying for personal finance? Personal financing options are easily accessible and ensure hassle-free repayment options. However, interest rates typically depend on the applicant’s credit profile and the lender’s policies.
Lenders look at various factors like repayment capacity, loan amount, income stability, employment stability, etc., before approving your application for a personal loan.
Here are some tips to ensure you can avail of the most competitive interest rates on your loan.
Have a good credit score
Clear all your dues and repay your previous debts, if any, on time. Doing so will ensure you have a healthy credit score and get a good deal on your loan. Most lenders prefer a credit score of 750 or above to approve loans.
Check your credit information report (CIR) regularly and ensure your report is up-to-the-minute and not missing the latest records. Another way to ensure a favourable credit rating to secure competitive personal loan interest rates is by monitoring the payment cycle of loans you have co-signed/co-borrowed.
Have a good repayment history
Timely payments of your credit card bill, loan EMIs, and other debts indicates an excellent financial condition. Lenders always make it a point to consider your repayment habits when checking your profile. An applicant who showcases disciplined payment cycles stands first in the order of preference.
Always compare lenders
This goes without saying! But whenever you plan to apply for a loan, you should carefully examine all your options.
If you are confused about the interest rates and the respective EMI amounts, you can use any personal loan EMI calculator lenders provide online. Especially in case you are borrowing a loan during the festive season when lenders offer relatively lucrative terms.
Did you know that your employer’s ability to offer you a steady job also affects your loan approval chances? Yes, you read that right! People employed at reputed blue-chip companies, MNCs, etc., are more likely to get favourable personal loan interest rates since their employers can provide a steady job. And consequently, such applicants are less likely to default on their EMI payments.
Ensure job stability
Job stability ensures a good credit score, which certainly impacts personal loan eligibility. Lenders often ask for your employment history of at least 2 years before approving your loan request. Thus, it would be best if you had a steady job and income prospects to avail of competitive interest rates on your loan.
To wrap up
There you have it! If you keep these tips in mind before applying for a personal loan, rest assured, your loan approval process will be smooth and hassle-free.