15 JULY, 2023

A personal loan can be significantly beneficial when you are short of funds and need financial aid. It can be availed in less time, and you need not run between banks to apply for one. You can apply for a personal loan online and complete the process by uploading the documents with the application form. Moreover, it is convenient as you do not need any collateral. Probably the best thing about personal loans is their flexible repayment facility. You can repay the loan as per your financial comfort by choosing a suitable tenure. However, you must know that the amount you need to pay is dependent on the interest rate. The higher the rate, the costlier will be the loan.

If you are looking forward to availing a personal loan, the following tips would help you get affordable rates.

  • Research lenders

Before you opt for any other method to get a low interest rate, choose your lender well. Your lender does not only decide your interest rates but also other fees you need to pay. You must choose your lender carefully. Check the interest rate they are offering along with their different charges. It would be best to take reviews about the lender online or from people who are or have been their customers. Just like with interest rate and related charges, other facilities and services offered also differ from lender to lender. If a lender has a complicated application process or takes more time to disburse your loan, these negate the positive impact of a low interest rate. Likewise, you also need to do your due diligence when it comes to the prepayment option offered by different lenders. These are some of the multiple pointers you need to keep in mind when researching a lender that offers a plan that fits your needs.

  • Look for offers and schemes

Lenders launch different offers and schemes to boost sales and attract customers. If you are planning to avail a personal loan, look out for such offers. Often, such campaigns offer reduced interest rates and better facilities. You can find the notification of these schemes in your messages or emails. These are limited period discounts that are usually announced during the festive season. However, ensure to read the fine print carefully while availing a loan as these can include hidden charges that might not be explicitly mentioned.

  • Maintain a high credit score

Your credit score is significantly important when you apply for personal loan. It indicates your repayment capacity and creditworthiness. Therefore, the higher the credit score, the better can be the chances of you getting a lower interest rate. You must have a credit score of a minimum of 700 for a personal loan. Check your score before you apply.

  • Leverage your professional credentials

Your work profile and organisation impact your personal loan interest rates too. Lenders prefer candidates who have a stable job profile and earn a steady income. Therefore, if you have a high salary and work for a reputed firm or a government organisation, leverage this with the lender and negotiate to get lower interest rates.

Additional Read: What Financial Practices Help a Borrower Get Affordable Personal Loan Rates? Know Here!

A personal loan can be a helpful means to arrange funds instantly. However, it is crucial to get lower interest rates to be able to reduce the cost of borrowing. You can use a personal loan calculator to check your affordability and EMI. Use these tips to get affordable interest rates and choose a suitable tenure.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.