Personal Loan- Want to get personal loan in low interest? Then this article is for you. In today’s time, personal loan has become a good way to meet the shortage of money – whether you need money for a holiday or for a sudden medical emergency. Earlier, one had to struggle a lot to get a loan, but in today’s digital era, applying for a personal loan is a piece of cake. You can arrange funds in minutes by following just a few steps on your phone.
For example, Moneycontrol offers you a completely digital personal loan facility. Minimal processing fees and money directly transferred to your bank account. You can apply for a loan in just three steps – fill in your details, complete KYC verification and set up your EMI repayment plan.
Factors affecting your personal loan interest rate
Income level: Your income plays an important role in determining the interest rate on your personal loan. Lenders view higher income levels as financial stability, which can help you get a loan on better terms. But if your income is low, banks may feel that there is a risk in giving you a loan, due to which the interest rate may be higher.
Repayment history: If you have a good repayment history, banks’ trust in you increases. That’s why lenders usually review your past repayment record before approving your loan. Your poor repayment history puts banks at risk of losing their loan money. Due to this, people with poor repayment history often get loans at higher interest rates.
Credit score: A high credit score indicates that you have a good track record of debt repayment. This increases the confidence of lenders, they feel that you will be able to repay the loan on time and their money will not go bad. Therefore, banks offer loans at lower interest rates to those with a good credit score. On the contrary, a poor credit score indicates a history of due payments, which can pose a big risk to lenders. Those with a poor credit score may have to pay higher interest on the loan or even their loan application may be rejected.
How to get a personal loan at low interest
Improve your credit score: Your credit score is one of the most important factors that influence interest rates. A score above 750 is considered excellent and increases your chances of getting a loan at a lower interest rate. To improve your score, regularly check and correct errors in your credit report. Keep your credit utilization ratio below 30% on all your credit cards and pay all your loans and bills on time.
Maintain a good repayment history: Lenders look closely at your past repayment behaviour to understand your loan repayment capability. A good repayment history with timely payments of EMIs and credit card balances helps lenders build trust in you. Consistently paying your EMIs on time not only boosts your credit score but also reflects financial discipline.
Lower your debt-to-income ratio: Your DTI ratio shows how much of your income is already going toward paying off debt. A low DTI ratio indicates that you are not financially overextended and can handle additional debt. To lower your DTI, focus on paying off high-interest loans first.
Negotiate: Don’t just accept the first offer you get. Different lenders may offer different interest rates. So compare loan options first.
