Accounting · January 18, 2020

5 Ways to Get the Best Personal Loan at Lowest Interest Rates

A personal loan is a convenient solution that you can avail to address important and urgent needs. Since personal loans do not require collateral, access to this offering is free of hassles. However, to mitigate lending risks associated with the absence of collateral, lenders are keen on attaching proportionate interest rates. Since these can be high, when applying for a personal loan, your task is not just to qualify, but also to secure the best personal loan interest rates on offer. This involves identifying which NBFC is best for a personal loan as well as taking certain measures to better your application’s prospects.

Here are 5 tips that can help you get a personal loan at a low rate of interest.

Work towards an ideal credit score

Banks and NBFCs sanction loans upon reviewing your credit score. Having an excellent credit score of 750 and above indicates that you are a creditworthy individual and can repay the loan that you are applying for on time. Further, an ideal score gives you bargaining power, which you can leverage to obtain the best personal loan interest rates offered by your preferred lender. To improve your credit score, pay your current EMIs and credit card bills in a timely manner, limit your credit utilisation ratio, and fix errors in your credit report, if any.

Be aware of seasonal loan offers

A smart way to obtain a favourable deal is to apply when your preferred lender has a seasonal offer running. Banks and NBFCs tend to extend low-interest-rate deals, for a limited period of time, such as during festive seasons. Grabbing a hold of such a promotion is a good way to secure financing at the best personal loan interest rates available. At times these offers are conveyed through flyers, SMS or emails and so, it is a good idea to opt into your lender’s email list to stay up to date with the latest offerings.

Make the most of your employer’s credibility

When you are employed at a reputed public or private company and are drawing an attractive salary, you can potentially avail an unsecured personal loan at a reduced interest rate. This is because lenders know that reputed employers are more likely to provide employees with a steady job and consistent income. This means that you will easily be able to make regular EMI payments. This works in your favour, enabling you to bag some of the best personal loan interest rates on offer.

Inspect the interest calculation method employed

Before sealing the deal with a lender extending an unsecured personal loan at a low interest rate, make sure to examine the interest calculation method used. This is because different methods yield different results and despite the seemingly low interest rate, the net interest payment you make can be unexpectedly high. If a flat interest rate is applicable, interest is computed based on the total loan amount, throughout the tenor. If a reducing interest rate is applicable, interest is computed based on the outstanding principal. In case of the latter, as you pay EMIs the principal keeps reducing, making it the type of calculation that offers you the best personal loan interest rates.

Compare lenders to pick the best option

When applying for an unsecured personal loan, examining lenders and their respective offerings is an indispensable step. This ensures that you not only get the lowest interest rates possible, but the most value too. This step also helps you identify the top banks and which NBFC is best for a personal loan. For instance, when you partner with Bajaj Finserv, you get access to a Personal Loan of up to Rs.25 lakh at a competitive rate of interest. Further, you benefit from no hidden charges and can make the loan even more cost-effective by repaying it over a tenor of up to 60 months. Bajaj Finserv also offers the Flexi Loan facility, using which you can withdraw from your sanction on the go and limit your interest payments to the amounts withdrawn only.

Keep these 5 tips in mind to fetch a high loan amount and the best personal loan interest rates. If Bajaj Finserv’s unsecured personal loan fits the bill, then simply check your pre-approved loan offer to gain instant approval by way of a customised deal.