Personal Loans are the most chosen option to tide over any financial exigency. The instant approvals and the faster disbursals is what makes borrowers choose Personal Loans as a term financing option. Personal Loans are unsecured—you do not have to provide any security or furnish a collateral to take a Personal Loan. Being an unsecured loan, the interest rate on Personal Loans is bound to be slightly higher. You can now apply for an Unsecured Personal Loan online. After verifying your eligibility, the bank will approve your Personal Loan application.
You’ve a choice of lenders —banks and financial institutions from whom you can avail a Personal Loan. When you apply for Personal Loans online, the first criteria in deciding the choice of lender is the interest rates. The interest rates charged vary between banks and to avail the best personal loan rates in India, it is recommended that you compare the Personal Loan interest rates India.
Personal Loan interest rates in India are impacted by the following;
- Net Income
The income that you get in hand every month after all deductions is the net income. Your annual net income is what the bank/lender examines to determine the quantum of the loan as well as the interest rate that is to be charged on the loan. Criteria such as whether you’re salaried or self-employed, your age, your remaining employment tenure are factors that are considered during the time your Personal Loan application is pending with the lender.
A higher net income not only qualifies you to avail a higher loan, but also a comparatively low interest rate. Each bank sets its own limits. Generally, a net monthly income of Rs. 40000 is sufficient to help you get a Personal Loan at favourable terms.
The reason for considering your net income is to assess your repayment capacity. If your net income meets the prescribed limit, you will be better placed to honour the loan obligations. The regular repayments on your part will give you a benefit in terms of reduced interest rates.
- Credit Score
Your credit score is compiled by CIBIL. A high CIBIL score (750+) gives you the privilege to take a Personal Loan at low interest rates. Your credit score is a reflection of your creditworthiness; how regular you are in the repayment of your dues.
Your credit score is a complete reflection of all the loan you have taken and the repayments you’ve made. Your credit card payments and outstanding are also reflected in your credit score. If your credit score is poor, banks are wary of even approving you a Personal Loan, let alone offer you a low interest rate.
So, if you want a Personal Loan on the best terms, maintain a high credit score; else raise your score and then apply for a loan. There are some of the tips to improve your CIBIL score for getting loan low interest rate.
- Organisation you Work For
The reputation of the organisation you work for has a bearing on your Personal Loan interest rates. If you work for a financially sound company, then you will be able to get a best Personal Loan at a low interest rate.
- Customer-Bank Relationship
If you have been a loyal customer of the bank, holding multiple accounts since a long time, then banks are more than willing to offer you a Personal Loan at reduced interest rates.
To sum up, if you want to apply Personal Loans at lowest interest rates, you can benefit by earning the prescribed net income, maintain a high credit score and maintain excellent relations with your bank.