How to get the best interest rate on a personal loan?

Learn all about the key factors to secure a competitive interest rate on a personal loan. Improve your creditworthiness, compare loan offers, and make informed decisions.
How to get the best interest rate on a personal loan?
5 min read
22 June 2023

A personal loan is an unsecured credit form, which means you are not required to put anything up as security or collateral. A personal loan is a great option for borrowers since it has fixed interest rates and flexible payback terms. The affordability of a personal loan, however, is determined by the interest rate charged by the lender.

The most effective strategy to take care of your urgent financial demands and keep borrowing costs in control is to take out a personal loan with a reasonable interest rate. As a result, you will not have to worry about going through financial difficulty when making repayments.

Here are a few tips that might help you to get the best personal loan interest rate:

Meet the lender’s eligibility criteria

It is critical to choose a lender with straightforward eligibility criteria for a personal loan. It can be harder to get a loan if you have to meet complicated requirements, and you may have to settle for an amount lower than what you need or an interest rate higher than you can afford. However, you can speed up the disbursal if the eligibility criteria are simple and the verification procedure is quick. Compare the terms offered by several lenders before applying.

Maintain a high credit score

Maintaining an excellent credit score is paramount in securing the best personal loan interest rates. If you have a good credit score, lenders may consider you a low-risk borrower and may offer you a low personal loan interest rate. It is advised to strive for a credit score of at least 685. Maintain a low debt-to-income ratio to raise your credit score and be eligible for affordable personal loan interest rates. Also, make prompt payments on your bills and outstanding debts to avoid any negative impact on your credit score. You can improve your creditworthiness and your chances of getting the best personal loan interest rates by ensuring a high CIBIL Score.

Ensure a stable job with a recognised company

Having a secured job with a reputable company is a good way of proving your financial stability. Knowing you have a reliable source of income from a reputable firm gives assurance to the lender that you will make loan payments on schedule. Additionally, lenders are more likely to trust someone who has been working for at least a year. These factors collectively reduce your risk profile, increasing the likelihood that you will be offered a personal loan with a good interest rate. On the other side, frequent job changes create doubt about your job stability and could hinder your loan application. Your total financial credibility will be strengthened and your chances of obtaining best loan interest rates will increase if you continue to work consistently for a reputable company.

Display all sources of income

It is crucial to disclose all your income when applying for a loan, including your primary income and any other sources like freelancing or consulting. This increases your creditworthiness as a borrower and confirms to the lender that you can repay the loan.

Compare the offers from multiple lenders

In addition to the above points, comparing the offers by different lenders is essential because the terms and conditions may differ. Similarly, there might also be some fluctuation in the personal loan interest rates. The process of comparing multiple offers is now simpler by using a personal loan EMI calculator. This calculator estimates EMIs by considering the personal loan interest rate, loan amount, and tenure. Borrowers can use this tool as often as necessary to find a loan that matches their repayment capacity.

It takes planning and careful evaluation of all these factors to get the best personal loan interest rate possible for you. Bajaj Finance Limited provides personal loans with competitive interest rates beginning at 11%. Head over to the personal loan page to get funds in a stress-free manner.

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