Contrast to secured loans, such as home loans or car loans, for which you need to pledge security; personal loans are unsecured loans with higher interest rates. Therefore, before taking out a personal loan, one of the crucial things to do approach a lender who gives you the lowest interest rate.
The lender will consider several things especially your creditworthiness before authorising your loan. Here are some tips to consider if you are interested in obtaining a lower interest rate personal loan
Have a repayment record
If there are unforeseen costs to handle, credit cards are useful. But, because of their high interest rates, you should be careful to clear your credit card bills in full and on time. This makes you a trustworthy creditor to your future borrowers, not to mention how it boosts your credit score.
If you are considering to apply for personal loan, a great starting point would be to check your prerequisite and eligibility. Instead of spending time on every bank website, contemplate visiting an online financial market website to research and decide from the various lenders. Another sensible thing to do is try your own bank. They offer you lower interest rates and better service.
Steady salary and employment record
Individuals working with reputable or MNCs are likely to have a more appropriate deal. This is due to the employer ability to deliver a steady income. Usually, creditors would recognise certain individuals with a steady income and a better ability to repay their payments on time.
Before accepting any personal loan offer, check the terms proposed by different lenders and compare them. Make sure your decision is based on interest rate as well as other factors such as loan term, prepayment fees, processing fees, loan amount, etc.
This is one of the first things a creditor can check to determine your financial stability. A good score guarantees you a place in the safe zone and improves your credit approval chances. Following are the =ways you can keep your credit score in healthy shape:
- If you are interested in using your credit card on a regular basis, ensure that your credit utilisation rate is kept to a minimum.
- Monitor your credit report at regular intervals as it helps you understand any inaccuracies, sudden changes, etc. that might form part of your credit report. Credit rating requests are often available with a credit office.
- Making multiple credit card applications makes you look risk intensive to lenders. Each loan application culminates in an investigation and affects your credit score. So, wait a while before you apply for another loan if you have recently faced a loan denial.
Read the agreement thoroughly before you apply for personal loan to prevent future hassles.