An online loan is one of the best modern financial solutions to meet your sudden financial needs. Whether you need funds for an impromptu trip or for a shopping expedition, an online loan comes in handy. You can apply for this quick loan from anywhere through a money loan app and avail any cash amount that you want.
With an online loan you get the option to choose any loan amount, ranging from Rs. 500 to Rs. 1.5 lakh. The repayment tenure is also highly flexible with most lenders offering a repayment tenure of 12 months to 60 months.
In addition to that, applying for a personal loan through a money loan app is very convinient. You just need to download the app, check your eligibility, fill in the necessary details and apply for the loan. The loan amount will get disbursed into your account within 48 hours.
With so many lenders offering personal loans today, you must make the necessary efforts to find the best deal that fits you right. The one thing that you must not miss is the interest rate.The interest rate levied on your loan determines your loan affordability and impacts your repayment capability.
Read on to discover 4 pro tips for getting the lowest interest rate on your personal loan.
How to get lower interest rates on personal loans?
The interest rate levied on your loan depends on several parameters. Some of these are beyond your control, like the repo rate or the operational cost of your lender. However, there are some factors affecting your personal loan interest rate that you can be controlled.
Here are a few such factors that can help you avail a personal loan at a very low interest rate:
1. Maintain agood credit score
A good credit score shows your responsible financial behaviour and your high creditworthiness. It increases your probability of getting a loan amount that you want, with a tenure that you prefer and at much better terms of the loan.
Since, your credit score is a reflection of your creditworthiness, having a high credit score assures the lender that you are a responsible borrower. They often offer you the loan at a lower interest rate and may even waive off the processing fees on the loan.
You can maintain a good credit score by paying off your debts on time. Keeping credit card utilisation limit below 30% also helps. In addition to this, availing a mix bag of credit, and keeping your loan enquiries to a minimum also helps in improving your credit score.
2. Research and compare online
Today, multiple lenders are offering online loans at competitive interest rates. You must spare some time to conduct your research to find the lender offering you the best loan terms. In addition to the interest rates, you must also check the loan flexibility, ease of repayment, loan charges and lender’s reputation.
If you are availing the loan through a money loan app, then make sure to read the reviews about your choosen lender. This will help you understand your lending partner better. In addition to that, check the ease of reachability and the time taken to solve your queries. Make sure the customer service offered by the lender is satisafactory.
3. Look for seasonal rebates
While planning for a personal loan, you must make sure to consider the promotional offers available during the festive time. Many lenders offers a concession on the interest rate or they waive off the processing fees on the loan. This can reduce the cost of your personal loan considerably.
You can download a money loan app and keep a tab on their offers and promotions. This is best when your expenses are not urgent. If you are planning to buy a high-end gadget or finance a trip, then waiting for the festive season can bring you great discounts.
4. Reduce the lender’s risk
Personal loans are unsecured loans which make them high risk debt instruments for lenders. They often charge a higher interest rate on personal loans to balance this risk. So, if you can reduce the risk associated with your loan application, then the lender might offer you a lower interest rate.
There are several ways to reduce the risk associated with your loan account. Firstly, maintain a high credit score always, this the first and foremost parameter than the lender will check. Secondly, apply for a secured personal loan by pledging an asset. Thridly, add an eligible co-applicant to your loan application. These simple tips will help you get a low interest rate on your loan.
Apart from the aforementioned ways, there are some other factors that can significantly reduce your personal loan interest rates. Some of them are –
- Method of interest calculation:You will be surprised to know that various lenders use varying formulas to calculate the interest rates on their credit products. Sometimes there is a flat interest rate and at others, there is a varying interest rate. Make sure you cross-check how the interest is calculated.
- Employment credibility:Your source of income can also have an impact on the interest rate levied on your personal loan. Usually, people working in the the government sector or MNCs get the benefit of a lower interest rate, because of their evident repayment capacity.
- Employment history: Factors like job tenure and Fixed Income to Obligation Ratio (FOIR) significantly influence the borrowing conditions and thus, interest rates as well. The more assuring your profile is, the higher is the chances of you getting a lower interest rate on your personal loan.
- Good relations: If you already have an established relation with a lender then that can help you avail a loan at a lower interest rate. So, before seeking a personal loan from a new lender, talk to your existing lender.They may offer you the new loan at a reduced interest rate. It can also reduce your paperwork burden and make your loan process much easier.
How to lower the overall loan burden?
The primary focus while availing an online loan is to reduce the interest rate on your personal loan. This will help you reduce your repayment burden. It is interesting to note that you can reduce your repayment burden by some other means as well. Some of them are –
- Make part-payment:You can reduce the burden of your personal loan, by making a part payment after a stipulated number of EMIs. For example, after 12 or 18 months of EMI, you repay a large amount which will reduce your interest payment significantly.
- Apply with a co-applicant:If you have a working spouse or any other family member, you can take a joint personal loan. Consequently, you can share the burden with your co-applicant.
- Go for a step-down EMI plan:In a step-down EMI plan, the EMI goes on decreasing every year throughout the plan. So, initially, you make relatively larger repayments so that the interest on the applicable principal amount goes on decreasing.
The interest rate on your online loanplays a very crucial role in deciding your loan affordability. So, make sure to do the necessary research before choosing your lending partner. You can download a money loan app, and easily check out the interest rates offered by different lenders.