An online personal loan can help you meet financial shortfalls that require immediate action. Nowadays, you can get a loan almost instantly without pledging any collateral. But personal loan interest rates vary widely depending on the lender and how well you meet the eligibility criteria. Before looking for the lowest interest personal loan, it is recommended to use a loan EMI calculator to determine the tenor and repayment amount comfortable for you. Once you have these figured out, you can choose to apply for a personal loan from lenders like Bajaj Finserv.
Before understanding how you can get the lowest personal loan interest rates, it is important to check out the factors that influence personal loan interest rates.
1. Credit score: This is one of the most crucial factors determining the interest rate you can get on a personal loan. Your credit score reflects how promptly you have repaid your previous loans. A good credit score (750 and above) gives you an advantage when applying for a personal loan. You can negotiate with the financial institutions for the lowest personal loan interest rates if you have a high credit score. On the other hand, a poor credit score will lead to lenders charging you higher personal loan interest rates.
2. Debt-to-income ratio: Your debt-to-income ratio indicates whether you will be able to repay your loan EMIs while keeping up with other expenses. It is best to keep your debt-to-income ratio under 50% to get the best personal loan interest rates. A 30-40% ratio is viewed most favourably by lending establishments. You can use the Bajaj Finserv Personal Loan EMI calculator to ascertain the right EMI and tenor for your financial situation.
3.Employment consistency: An applicant with a steady, full-time job with demonstrable professional growth is always preferred over a freelancer or contractual worker. Lenders view a stable job as an assurance towards monthly loan repayments. They also consider your job history and how long you have been working in your current employment before deciding on the personal loan interest rates.
While an online personal loan has several advantages, there are some thumb rules you can follow to get the best interest rates while applying for one:
1. Maintain a high credit score:Build your CIBIL score by repaying your previous and existing loans on time, and you will have no trouble getting the lowest personal loan interest rates the next time. Never opt for multiple loans simultaneously, as this is the surest way to default on repayments and dent your credit score.
2. Compare interest rates:Interest rates on personal loans online range from as low as 13% to as high as 35%, depending on the loan amount, credit score, and eligibility criteria. Browsing through the portals of major banks and lending institutions like Bajaj Finserv is a good way of comparing personal loan interest rates.3. Negotiate with the lending institution:You can even negotiate with your bank or NBFC for a lower interest rate if you exceed the eligibility criteria. Your capacity to negotiate depends on two main factors – your credit score and income. The higher your credit score and income, the better placed you are to bargain with banks over interest rates.
4. Keep an eye on special offers: Most major banks and financial establishments like Bajaj Finserv offer various deals from time to time. Such waivers or cashback deals are usually offered during festive seasons or special occasions. Regularly checking the official websites of all the main banks and lending institutes can get you a sweet deal.
Your quest for getting the lowest interest personal loan should begin with understanding the factors that influence personal loan interest rates, such as your credit score, income, and work history. If you score high on the eligibility criteria, you can even negotiate with the bank for a lower interest rate on personal loans online. Once you have a loan amount in mind, we recommend using a loan EMI calculator to determine your exact monthly liability. This will help you keep up with the payments and avoid defaulting.