Besides instant approvals, easy-to-meet eligibility criteria, repayment flexibilities, and no-end-use restrictions make personal loans a popular choice among Indian borrowers. Reputed fintech companies extend these unsecured high-quantum advances to applicants upon meeting some set parameters.
However, the repayment affordability depends on the applicable personal loan interest rates. Applicants must keep the following pointers in mind to avail the best personal loan at the lowest interest rate.
How to avail best personal loan interest rates?
Personal loans in India have always been a viable solution for borrowers to meet unforeseen financial emergencies, such as medical expenses, debt consolidation, etc.
- According to RBI, personal loan lending reached Rs. 7 lakh crore, i.e. a rise of 20% during the end of 2020.
Moreover, the availability of online personal loans has made this credit option all the more popular among consumers, funding their diversified financial obligations.
However, to sanction this advance, lenders consider several factors, such as an applicant’s credit profile, age, employment, income, etc. Lenders approve the loan application depending on a borrower’s eligibility and repayment history.
Here are some of the effective ways to obtain market-best personal loan interest rates-
Pay off existing financial debts
While sanctioning an unsecured credit like a personal loan, leading financiers usually focus on the repayment capacity of an applicant. Borrowers with multiple existing financial obligations often default on their EMIs. Therefore, lenders consider FOIR (Fixed Obligation Income Ratio) that specifies a borrower’s fixed obligation concerning their income.
In this regard, borrowers must try to repay their existing debts without failure before applying for new credit. Besides, one should also try maintaining a FOIR within the range of 30%-40% to ensure availing the best personal loan interest rates. If a borrower’s FOIR is on the higher side, they will be considered a risky borrower, resulting in rejection of loan application or attracting a higher interest rate.
Improve credit score
A healthy score is an indication of a borrower’s good credit profile. Lenders consider this score to assess a borrower’s creditworthiness and capability of repaying credit. A score of 750 or above will allow borrowers to bag a better loan deal. To maintain a healthy score, borrowers need to preserve their credit utilization ratio, avoid applying for multiple loans, pay off EMIs on time, etc. A delayed or missed payment can significantly impact one’s credit score leading to difficulty in loan approval. In this regard, borrowers must know the ideal CIBIL score for a personal loan and apply accordingly.
Include professional credentials
Applicants employed in a reputed MNC, public or private organizations are likely to get favorable loan terms. While a borrower is assessed based on certain eligibility parameters, a considerable monthly income allows them to negotiate for the lowest interest rate on a personal loan.
As per personal loan eligibility parameters, an applicant’s minimum salary should be Rs. 22,000 or higher, depending on the job location. Often, a company’s reputation favors borrowers as lenders conclude that they have a stable career and can repay on time. Moreover, it is wiser to include additional income as evidence to strengthen repayment capability. Borrowers must not forget to enquire how much personal loan they can avail of on their salary before applying for the credit.
Research and compare interest rates
Before applying for any credit, it is wise to conduct thorough research and compare different lending rates prevalent in the financial market. One must choose a financial institution offering competitive interest rates. Applicants can use the online personal loan calculator to compute monthly installments for a hassle-free repayment and know how to better plan personal loan EMI repayment.
Reputed financial lenders like Bajaj Finserv also provide digital loan applications to avoid the hassle of documentation and ensure instant disbursal. Moreover, these leading NBFCs also extend pre-approved offers to eligible borrowers on various secured and unsecured financial products.
These offers significantly reduce the hassle of documentation and expedite the loaning procedure. To check your pre-approved offers, just provide your name and contact information.
During the pandemic, unsecured financing options witnessed a massive demand, allowing lending institutions to make borrowing convenient for applicants. Nevertheless, borrowers must follow the abovementioned methods to ensure they avail of the best personal loan interest rates in 2022.