The personal loan consumption in India, especially the ones below Rs.50,000, has increased almost two times in the last three fiscal years, reveals a report. While easy availability is one of the reasons for this booming demand, others can be attributed to
- RBI’s decision to reduce the repo rate from 4.4% to 4% in May 2020 resulted in a subsequent lowering of personal loan interest rates.
- An economist claimed that the apex bank is also expected to announce a Repo rate cut of 25 basis points in the first quarter of 2021.
These ensure a low interest personal loan that allows borrowers to service this credit with affordable EMIs than before.
However, apart from this repo rate cut, individuals can also reduce a personal loan’s interest rate by following some simple tips.
Tips to reduce the interest rate of an unsecured personal loan
Following some of these steps mentioned below can result in a borrower availing of the best personal loan terms during such a credit application.
Take advantage of seasonal offers
Most financial institutions offer seasonal offers on loan products. Individuals can leverage the benefits of such requests that ensure low interest personal loans. Generally, such offers are available during the summer or holiday seasons.
Adopt financial habits to maintain a good CIBIL score
Another conventional way to service lower interest rates on a personal loan is by maintaining a high credit score. Generally, you need to have a CIBIL score of 750 and above to be eligible for the credit.
If you have a score lower than this, you can improve the same by following the below-mentioned ways.
- Clear all your existing debts. You can start with small obligations to make the process easier.
- Mention all your income sources.
- Limit the credit utilisation ratio to below 50%
- Avoid making multiple credit inquiries.
Hence, if you plan to opt for this loan, you should know how the CIBIL score is for personal lending.
Meet all eligibility criteria
Borrowers who want to avail themselves of the best terms and reduced cost of borrowing can do so after improving personal loan eligibility. Although the eligibility varies from lender to lender, individuals should consider some standard requisites like
- Borrowers need to be resident citizens of India.
- The age should be between 23 and 55 years.
- Employed with an MNC, private or public company, etc.
Along with that, individuals also have to fulfil lender-specific criteria to help them get the best personal loan rate.
Negotiate with current lenders
Individuals who have better eligibility and all other requites, can negotiate for a low interest personal loan with their current lender.
Select financial institutions like Bajaj Finserv offer personal loans at competitive interest rates. They also provide a personal loans eligibility calculator using which a borrower can check their EMIs before acquiring the credit.
This NBFC also extends pre-approved offers that expedite the loan process and make it straightforward. Besides personal loans, such requests are also available on various financial products like business loans, credit cards, etc. All you have to do is to provide some necessary credentials to check your pre-approved offer.
Consider a loan balance transfer
Besides new borrowers, existing ones can also avail of a low interest personal loan by transferring their outstanding loan balance to a new lender.
It would allow them to service the loan at better service terms, thereby saving interest outgo substantially. However, before opting for this facility, individuals should know how to calculate personal loan EMIs.
By availing of this facility, individuals can save substantially on interest payment. However, they should also know the charges individuals need to pay to new and old lenders.
Hence, if you follow these tips diligently, you can avail of a low interest personal loan and reduce the EMI outgo to a great extent.