Your Personal Loan Interest Rates and Total Loan Liability in Check

Personal Loan Interest Rates
Personal Loan Interest Rates

From the beginning of a borrowing journey to its end, one thing that remains unchanged is the lookout for low interest rate levy. In the case of unsecured advances, the need to find an affordable offer only multiplies due to the inherent high-rick arrangement of these loans that keep the interest rates naturally up. So is the case with personal loan interest rates as well. One of the prime concerns of individuals availing these advances is that if they found the best rates on their loan offers or not. Now, when it comes too overall loan affordability, a borrower’s repayment decisions are equally important as the interest rates levied on these loans.

We thus bring you a list of ways that you can adopt to keep your interest rates as well as your total loan liability low, thus keeping financing affordable.

Ways to Keep Personal Loan Interest Rates and Total Liability Low

  1. Apply with a high credit score

Your personal loan interest rates are a close representation of the risk that your lender bears overalls. A great way to measure this risk is to check your credit score and history. A high credit score always indicates a high creditworthiness of the individual, thus diminishing the overall risk associated with the borrower. For the purpose of availing personal loans, borrowers need to maintain a credit score over 700.

Make sure to check your score before applying, and work on your credit profile at least 6 months prior to sending your application if it is lower than 700. You can make timely repayments, maintain a fixed obligation to income ratio, and utilise your credit wisely for a score improvement. First-time borrowers with their credit scores as zero can avail these advances too, albeit at higher rates.

  1. Check and meet all eligibility criteria before applying

One of the best ways to secure a low interest rate on your personal advance is to meet all the eligibility criteria as stated by the lender. Thus, it is crucial that you first check these requirements and match your borrowing profile accordingly before applying.

  1. Produce all income documents during paperwork

When sending in your documents for paperwork completion, it can be wise to submit all documents of your primary and secondary incomes. Individuals often settle with their primary income documents, either the salary or business profit, to represent their financial capacity. In addition, they can also add documents related to rent received if a property is let out, or profit from investments, and the likes when doing the paperwork for an appropriate representation of their borrowing capacities for better rates.

  1. When selecting a loan offer, find the best lender

At the initial stage, when you are not yet sure of the lending institution to borrow from and looking for loan offers, make sure to undergo a market research to find a financier offering the lowest personal loan interest rates. It is one of the best ways to secure affordable financing.

  1. Negotiate with your lender through employment stability

You can also undertake to negotiate for the best interest rate on your personal loan with the lender by leveraging your employment stability. However, such negotiations are found to be worthwhile only when you are employed with a reputed organisation, public or private.

  1. Use previous lender relations when availing financing

When seeking low interest rates, one of the useful ways to do so can be by approaching a financial institution where you already have relations with the lender. Being acquainted can work in your favour of securing financing affordably.

  1. Choose a short tenure for repayments

As interest charged is an acute representation of the quantum as well as duration of the risk associated, a longer tenure means risk bearing for an extended duration. Lenders are thus inclined to charge high rates on loans availed for long tenures. Thus, irrespective of how affordably tempting a long tenure may be, it comes with a higher rate margin which must be considered when assessing loan affordability.

  1. Make prepayment

When cutting down on your total personal loan liability, one of the best ways to do so is by making prepayment. You can use any lump sum amount available to prepay your loan any time before the tenure ends. Consider the charges involved for final savings estimation.

  1. Pay in higher EMIs

You may also choose to pay in higher EMIs than initially determined, which will lead to early repayment completion and savings on your interest liability.

Along with finding the lowest personal loan interest rate, you must also take care to avail financing that best fits your repayment capacity. Use financial tools like EMI calculator and eligibility calculator to best decide how much you should borrow for easy approval and affordable repayments.