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6 Tips to Avoid High Interest Rates on Personal Loan

A personal loan is a type of “unsecured” loan that is provided by commercial banks, credit unions and other financial institutions. An unsecured loan, in turn, is a type of loan where a consumer is not liable to submit any collateral to the lender. Minimal documentation is required by the banks.

However, the interest rates of unsecured loans are comparatively higher than that of secured loans. This is because, in the case of secured loans, the lender takes a collateral/mortgage from the borrower which can be sold by the authorized party if the loan is not repaid on time. Unsecured loans are provided without any such ownership of property by the lender.

The procedure of applying for a personal loan is consumer-friendly and convenient. One can directly give a loan application to the bank or choose an online loan application method.

For a personal loan online application, all you need to do is provide the details that are required and submit them. If you are looking for financial aid, apply for a personal loan now!

One can apply for a personal loan through an online procedure in a very easy way.

What about the High Interest Rates?

This is the first question that pops up in the mind of a person who is looking for a personal loan. Yes, it is a very relevant question and it bothers almost every loan seeker. However, the same interest rate is not levied on every borrower. A moneylender considers a lot of facts before finalizing the interest rate that would be collected from the borrower.

Here are 6 tips that one can follow to avoid high-interest rates:

1. Maintain Good Credit Score

A good credit score plays a crucial role when it comes to availing a personal loan. It is reviewed by the lender to decide how much amount would be sanctioned to the borrower and at how much interest rate. A credit score is important because it shows that the loan seeker is a trustworthy and responsible person who repays his debt on time.

The higher your credit score, the more likely you are to avail of a high amount of loan. Also, if it is at par with the lender’s expectation, a borrower can negotiate the interest rate and get the loan at a lower interest rate than the usual rate. You may also try a personal loan online application facility and check your loan eligibility.

2. Keeping a Good Repayment Record

A person who has maintained a good repayment record in the money market may grab a better deal than others. A borrower in such a case is in a position where he/she can ask for a low-interest rate. A lender reviews the previous records of the borrower. So, if it is found that one has maintained a record of paying the EMIs on or before time, he gets his name in the good books of the banks.

3. Employment History

The monthly and annual income of a loan seeker is another considerable factor in the case of personal loans. A salaried individual who has been working consistently in the same company stands a good chance of getting a loan at a lower interest rate. A job seeker or someone who keeps changing his/her workplace is considered to be irresponsible and fickle-minded and might not repay the loan properly.

Also, if you are self-employed, the turnover and financial performance of your business would matter to get a personal loan at a lower interest rate.

4. Compare Interest Rates

Different banks offer personal loans at different interest rates. Therefore, comparing the available rates of different banks and then selecting the suitable one would be more beneficial. All the details of the interest rates of different banks are on the Internet. You may go for a personal loan online apply and go through the available options.

5. Loan Tenure

A personal loan tenure varies from 1 to 5 years. A borrower might get a lower interest rate for the same amount of loan if he opts for a small tenure. The availability of such plans can be surfed through the internet by personal loan online applications.

6. Employer’s Credibility

For a salaried individual, the company name and reputation are considered. If someone is working in a big MNC (Multi National Company), an international company, or a leading sector, he/she has an advantage where they can use their employer’s credibility and get a personal loan at a comparatively lower interest rate.

All this is because an employee of a leading and growing company is less likely to get into a situation where he/she would not be able to repay the loan.

Personal loans are a preferable source of credit and are easy to acquire. A person who has goodwill in the money market and is considered to be capable enough to repay the loan can avail of it easily with an affordable interest rate.

If you too are looking for a personal loan, check your eligibility today! You may go online and try the personal loan online application option.

Ajeet Sharma, the founder of Financegab and a well-known name in the field of financial blogging. Blogging since 2017, he has the expertise and excellent knowledge about personal finance. Financegab is all about personal finance which aims to create awareness among people about personal finance and help them to make smart, well-informed financial decisions.


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