Individuals depend on Personal Loans for various funding needs. However, smart borrowing means fulfilling financial needs at the lowest possible cost. While loan seekers can look up many offers and apply for the
best Personal Loan in India available to them, keeping an eye on the interest rate is the most crucial aspect. It dictates how much and how affordable the repayment would be as it directly affects the EMIs or monthly instalments. With a low interest rate, borrowers can repay their loans without experiencing much financial stress during the repayment tenure. So, before applying for a loan, it is crucial for every borrower to consider their future financial wellness and pay close attention to the interest rate being charged.
Read on to learn how you can get low interest loans, no matter what you plan to cover: medical treatment, a wedding, home improvement, education, a vacation, and much more.
Compare Loan Offers Online
Doing ample research is the foremost step to getting a low interest rate personal loan. By checking different lending institutions' interest rates online, you can quickly compare and find the best loan offer with the most affordable interest rates. Comparing interest rates helps loan seekers make informed loan decisions. Approach the Existing Loan Provider
Most lending institutions offer lower interest rates, better terms and friendlier loan conditions to customers they have worked with. Since they already have the borrower's documents and know their repayment habits, they offer the best loan plans according to their credit history and repayment track record.
Ensure that your Credit Rating is Up-to-the-Mark
Different lending institutions accept credit scores from various credit bureaus according to their internal policy. Whether they accept Experian or CIBIL, maintaining a high credit score ensures getting the best Personal Loan in India at low interest rates.
Most finance companies prioritise the credit score while evaluating an applicant's eligibility and credibility. The higher the credit score, the lower the interest rates they can qualify for. That is because the credit score showcases an applicant's credit behaviour in numeric terms. For instance, those with a score above 630 assure lending institutions that the applicant has repaid their past loans on time. That is a good sign.
Check the Current Debts
Existing debts and borrowings act as a barrier that lending institutions carefully assess while determining their eligibility and interest rates. These might include Home Loans, Business Loans, Personal Loans, pending credit card balances, etc. Those with existing debts must check them before applying for a new Personal Loan. Those with a DTI ratio above 30% attract higher interest rates than others due to higher chances of missing EMI payments.
Fulfil the Lending institution’s Eligibility Criteria
Lending institutions set different conditions that each applicant must meet to qualify to take a personal loan. These include the loan seeker’s age, income, work experience, employment, credit score, DTI ratio, etc. Most of these eligibility conditions aim at assessing the applicant’s repayment capacity and financial stability. Those who meet all these conditions get low interest loans that help them reduce their financial stress.
Keep Documents Ready
Although most loan providers have minimal documentation requirements these days, they still need to see a few necessary documents that determine an applicant’s identity, residence, and income.
Along with a duly filled loan application form, the applicants must also provide their passport-sized photographs. They can use their Aadhaar Card, PAN card, or government ID as identity and residence proof. Besides these, they must also provide relevant financial documents to prove regular income, including the current year's form 16 and pay slips. Keep these documents ready to get a low interest rate Personal Loan.
Co-Apply for a Personal Loan
Co-applying for a Personal Loan with a credible individual improves the chances of approval at better interest rates. Those with low incomes or credit scores may include a high-income or credit-score individual in their loan applications to get a hassle free personal loan. Co-applying for a loan with a highly credible person will reduce the lending risk for the loan provider, encouraging them to offer better interest rates on such applications.
Choose a Suitable Loan Tenure
Although the rate of interest is the most crucial aspect of any form of credit, the loan repayment tenure is just as important: it significantly affects the loan interest a borrower pays to the lender. Most NBFCs offering the best Personal Loans allow borrowers to choose their repayment terms according to their monthly budget.
A longer tenure reduces the EMI amount and makes the repayment more manageable. However, it increases the total interest outgo by the term end due to the increased number of EMIs. It is advisable to use a Personal Loan EMI calculator to know the EMI amounts for different loan terms and choose the shortest possible tenure with affordable EMIs.
Conclusion
The aforementioned tips can help borrowers get low interest loans no matter where they borrow from. However, they must carefully research, compare, and choose their loan provider to get the best deal on a low interest Personal Loan for themselves.
