How to get an affordable interest rate on your personal loan

Personal loans are a type of loan which you can take for a non-commercial purpose eg. Re-decoration of a house, holidays etc. This is used to finance personal needs without having to dip in the savings. Personal loans approvals are fast and simple.
It is most important to get the best personal loan interest rates.This is because it plays an important role in the repayment of the loan. Since this is an unsecured loan, the interest rates are often very high, making it difficult for you repay the loan on a monthly basis.

It is a good idea to get an overall picture of all the different institutes you can get a loan from. Banks rates are often low, and one must look around for the best rate before finalizing.

Satisfying criteria for loan application

There are different criteria for allocation of personal loans like the individual’s employment status, income, age, repaying capacity etc. All you need is to show your proof of employment and identification to avail the loan.To get the best interest rate, enquire at many places. The banks would generally want to know your details. Your documents like salary slip and income tax returns can also help you get a lower rate than what was offered before.

Possessing a good credit score

You will get the best personal loan interest rates if you qualify as low risk candidate. If you have paid all your earlier dues and have not defaulted on any other payment, you can get lower interest rates. A good credit score can become an important factor in getting a low rate. In some cases, there is also a provision for monthly reducing basis i.e. the interest is reduced on a monthly basis, depending on the principle. Most banks offer a loan for 1-4 years. Therefore, the best thing to do is discuss the amount and duration of the loan beforehand with your bank, and then get Equated Monthly Installments on it. Getting the lowest EMI can make a huge difference to ease of repayment of the loan.

Opening an account in the same bank as the loan application

Another point which can work in your favour to get the lowest personal loan interest rates is to have a bank account in the selected bank. This can help get a preferred rate which is lower and the normal rate. This rate can be lower still if you have a salary account with the bank. Look out for the bank’s repayment and prepayment criteria. If you choose for automated payment of installments through the same bank, this can also help you lower the rate.

Thus, there are several ways to get the lower interest rates on personal loans. Try to use all the important factors – like your credit score, research on all the lending institutions ad relationship with the bank for get the best interest rates on your personal loans.