Here's how you can get a affordable interest rate on personal loans

06 DECEMBER, 2022

Imagine this, you have been diligently planning for a dream vacation with your family for years, and you are finally ready to make it happen. You have your eye on the perfect destination, but need to take out a loan to finance the journey and other expenses. You start searching around for personal loans and quickly realise that the interest rates are higher than expected.

If you take out a loan with a high interest rate, it will take you more time to repay the loan since a large portion of your monthly EMIs will go towards interest rather than the principal. As a result, you may not be able to afford the vacation of your dreams. However, you may achieve your travel goals if you can find a personal loan with an affordable interest rate.

On that note, here are 3 effective ways to increase your chances of securing the best personal loan interest rate and getting the financial help you need.

1. Apply for a realistic amount and compare multiple lenders

Note that you will need to repay the loan amount plus interest. Thus, be realistic about how much you can afford to borrow.

Start by reviewing your monthly income and expenses to understand how much you can afford to repay each month. Then, use a personal loan EMI calculator to estimate your monthly payments for different loan amounts and terms. By adding the loan amount, tenure, and interest rate, the calculator can instantly show how your monthly payment would change. This can be helpful in deciding which loan offer is best for you.

2. Use your professional credentials and show additional income

Lenders are always looking for stable borrowers who have a good chance of making their payments on time. So, if you work for a reputable public or private sector company, make sure to mention it in the application or to the lender directly. This will show the lender that you are a reliable applicant and have the financial means to make timely payments.

You can also show any additional sources of income on your loan application, such as part-time business, income from rent, trading, etc.

3. Check for seasonal deals

Many lenders offer special rates and reduced processing fees during festive periods, which can reduce the overall cost of your loan. So before hitting the personal loan apply button, it's worth checking with your lender to see if they have any seasonal offers available. Also go through their terms and conditions carefully to avoid any unexpected fees or charges.

Besides the above-mentioned tips, there are other smart financial habits to focus on for securing an affordable personal loan rate, such as building a good credit score, maintaining a clean repayment history, avoiding multiple loan applications, and using your banking relationship with the lender.

Personal loan frequently asked questions

Q1. Who can apply for a personal loan?

Almost anyone can apply for a personal loan as long as they meet the eligibility criteria set by the lenders. Most lenders usually have basic personal loan eligibility criteria that revolves around their -

• Organisation with which they are employed
• Age

Q2. What are the documents required for applying for a personal loan?

While each lender will have specific requirements, some general documents are required to complete a personal loan application. They include -

• Identity proof (PAN, Aadhaar, Voter's ID, etc.)
• Residence proof (current utility bills, passport, etc.)
• Last 3 months’ bank statement
• 2-3 passport-sized photographs

Q3. How to check personal loan offers?

You can either do this by visiting the websites of different lenders or keeping an eye on your email and SMS inboxes. Most lenders advertise their personal loan offers through these channels. Another way to stay updated on personal loan offers is to follow the social media accounts of different lending institutions.