Lenders consider a number of factors, including a loan applicant’s credit score, monthly income, job profile and employer’s profile, before they approve one. personal loan. The increase in the adoption of risk-based pricing has prompted lenders to consider these factors when setting personal loan interest rates.
Following these tips can help you take advantage personal loan at a lower rate.
Maintain a good credit score: People with a credit score of 750 and above are more likely to get the loan approved. Such consumers are considered to be more financially disciplined and therefore carry less credit risk to lenders. Lenders may offer preferential interest rates to loan applicants with higher credit scores.
Gaurav Agarwal, Senior Director, Paisabazaar.com said, “Healthy things like paying your EMI and credit card bills by the due date, limiting the credit utilization ratio within 30%, avoiding monitoring guaranteed or co-signed loan accounts Follow credit practices. Multiple loan or credit card applications within a short period and maintain a healthy credit mix to build and maintain a strong credit score.”
Aggarwal said, “Develop a habit of reviewing your credit report at regular intervals, ideally at least once every three months. By doing this you will need to make corrective efforts, if necessary, to improve your credit score. This process will also allow you to identify and correct incorrect information or clerical errors. A revised credit report will automatically raise your credit score.”
You can get a free credit report each year from each of the credit bureaus. Alternatively, you can also get free credit reports from online financial markets.
Maintain a good banking relationship: While going for a personal loan, you should inquire with the banks and Non-Banking Financial Companies (NBFCs) with whom you have an existing customer relationship.
Many of the many lenders that offer personal loans offer personal loans to existing customers at preferential interest rates. Such banking relationships can be in different forms such as current, savings, salary or fixed/recurring deposit accounts or existing loans or credit cards.
Therefore, those looking to avail a personal loan should first start their search by contacting the bank and NBFC with whom they share an existing banking and lending relationship. The interest rates and other loan facilities they offer can then be used as a benchmark to compare personal loan interest rates from other lenders.
Interest Rate Comparison: In today’s digital world, it has become easy to compare interest rates among various loan offers by various banks and NBFCs. So, you must do proper research work before submitting the application form.
Agarwal said, “With banks and NBFCs offering personal loans, their interest rates can vary widely, anywhere from 10% to 24% per annum. As the credit appraisal process and risk appetite of the lenders also The chances of personal loan approval and the interest rate will also vary among lenders.Therefore, people who are planning to take a personal loan should compare the offers of as many lenders as possible before choosing a particular lender. “
However, when comparing different personal loan offers, don’t just compare the interest rate. You should also evaluate other loan features such as processing fees, loan amount, repayment tenure and prepayment charges before finalizing a particular lender.
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