The perfect option to borrow money at a time of cash crunch is a personal loan. Personal loans are indeed offered at a higher rate of interest but a loan at a cheaper interest rate can be a borrower’s way to tackle the problem. Whether it is your child’s wedding or a medical emergency, a personal loan can solve it all. A personal loan is an unsecured loan that is borrowed to meet any purpose and it is generally, the personal loan is offered for a shorter tenor. There is a pool of lenders who offer personal loans at a competitive price, so you need to crack a deal that offers the best (lowest) interest rate, which will make the repayment of a loan easy.
Top 10 banks which offer personal loan at the cheapest interest rate:-
|Bank name||The interest rate offered by bank|
|Punjab National Bank||8.95%|
|Bank of Baroda||10.50%|
|IDFC, IndusInd and Union Bank||11.00%|
Rates as on November 5, 2020
Here are a few tips which can help you get a personal loan with a lower interest rate.
1. Maintain a good credit score
To get personal at a lower interest rate it is important to have a good credit score. A score which is in a range 750-800 is considered good or excellent. Lenders use the credit score as a creditworthiness tool. The score helps the lender in deciding the repayment tenure and interest rate. If a borrower has a good credit score then there are chances that he/she can get a personal loan at a lower interest rate when compared to a person who has a low credit score.
2. Research in the market and compare the lenders
Don’t act like a bull and hit the bull’s eye. To get the best offer which fulfils your needs you must research in the market before applying for a loan with a lender. There are so many lenders available in the market, so to get the best Personal loan interest rate to compare the interest rates which are offered by the lenders. However, there are chances that XYZ lender might charge the lowest interest rate but has hidden charges attached to it which may come as a surprise to you later. So, choose wisely, whatever is best for you.
3. Good repayment history may get you to lower interest rate
Maintaining a good repayment history gives you an upper hand to ask for a lower interest rate, a borrower can negotiate on these terms. It is ideal to pay all your EMIs either on loan or credit card on time. Good repayment history not only attracts a lower interest rate but it also increases the creditworthiness which reduces the chances of loan rejection.
4. Ask for seasonal offers
During the festival period, lenders generally run offers in which a borrower can get many benefits like a discount on processing fees which makes the interest rate lower. If a borrower has to take a loan and a festival is approaching then you can wait to get the best offer, if there, not an emergency. Lenders inform the customers about the festival offers by sending an email or an SMS.
5. The credibility of the employer
An individual who has a stable job might get favorable deals, like a lower interest rate. Lenders give preference to the people who work with reputed companies as it ensures that they will be able to repay on time. Lenders offer the lowest interest rate looking at the creditworthiness of a borrower.
6. Understand the method of calculation
Don’t get fooled by the lowest interest rate, if any lender is offering a lower interest rate on Personal Loan then you must know the calculation behind it. Some lenders provide personal loans at a fixed interest rate and others offer a floating interest rate. In the fixed interest rate, the payment of interest is calculated on the full loan amount for a whole tenure and in floating interest rate it is calculated on the outstanding principal amount. If this method is followed then you might end up paying more money if the lender is charging you a fixed interest rate, even if the interest rate is lower.
To get the best offer, a few of the important things is to do thorough research, borrow from a credible lender, maintain a good credit score, and many more. By following these methods a borrower can definitely save some amount.