A personal loan is one of the most popular financial instruments for dealing with temporary and sudden financial crises because there is no end-use limitation, and it does not require any collateral. In the last few decades, personal loans have gained so much popularity that there is a vast market for them. NBFCs, Nationalized banks and DSAs, all offering personal loans, promise to provide their clients with the best service and the lowest rate personal loan. In this regard, as a borrower, you must keep some important factors in mind when applying for the lowest rate personal loan due to competition.
Below are a few things to consider availing of the lowest rate personal loan
Keep your CIBIL high
It is generally considered a decent CIBIL score if the CIBIL score exceeds 750. You are more likely to be approved for a new loan with a decent CIBIL score. It further enhances your chances of getting granted the lowest rate personal loan. CIBIL plays a significant role in this, representing your financial health. CIBIL demonstrates all the borrowings and repayments you have made. Thus, applicants with an excellent CIBIL score are considered more creditworthy and more likely to get a loan at a lower interest rate than those with a CIBIL rating below 700. As a result, if you wish to apply for a personal loan at a low-interest rate, then you will need to maintain a good CIBIL score to get approved.
Check out different lenders’ interest rates
Your borrowing cost is determined by the interest rate, which determines how much you will pay. Because so many lenders are offering personal loans, you must compare among the loan providers and get the loan from the one offering the lowest rate personal loan. As a general rule, it is always a good idea to visit an online financial marketplace and compare the different offers to make the comparison. As a result, you will be able to get the best deal, and you may also receive some suggestions to get the lowest rate personal loan.
Analyze interest calculation method
Almost everyone who takes out a personal loan does not know about this. Still, checking the method by which the lender calculates the interest payable on your personal loan before taking out a loan is essential. For instance, you can use an interest rate calculator to understand interest rates. It may be possible to get the lowest rate personal loan, but at the end of the loan term, you might end up paying more than expected. There are several reasons for this, one of which is that most lenders offer a flat interest rate or reduce the interest rate throughout the loan.
The interest rate on the loan is calculated on the entire principal of the loan if the lender charges a flat interest rate throughout the loan tenure. In contrast, when the interest rate is reduced, it is calculated only on the outstanding principal amount of the loan. In other words, when you get a personal loan that has a flat interest rate, you end up paying a lot more than what you would expect. An interest calculator is a helpful tool that automatically calculates the interest rate applied to your personal loan.
Stable employment and a fixed income
Whenever a lender lends to a borrower, the most crucial thing they look for is their ability to repay the loan. When it comes to borrowing money, having a fixed income source and job stability is undoubtedly a plus point for the borrower. Also, it increases your chances of getting the lowest rate personal loan. Additionally, the lender can get the loan approved at a lower interest rate because the lender is sure the loan will be repaid on time.