A Personal loan can be useful for carrying out several important expenses or even consolidating debt. However, the interests of such loans are often considered to be higher, which often leaves individuals with a common dilemma of whether to consider personal loans in the first place or not. Well, contrary to the misconception, you can loan with low interest rates but for this, there are certain important things that you should know.
What decides the Interest Rates of Personal Loans?
There are a host of factors that can have an impact on the low interest rate of personal loans and these are:
- Credit Score
Maintaining a good credit score can help in unlocking your path to low interest rate personal loans. With a higher score, you can represent your creditworthiness which itself reduces the risk of lender and this lowers the interest rate. For achieving higher credit score you can:
- Balance the credit utilization ratio, which equates to the existing credit divided by the overall credit limit, and maintains this ratio to about 30 percent.
- Closely monitor your credit report, especially when you perform score enquires to analyze the current condition.
- Avoid application of credit card or direct loans; rather strike a good balance between unsecured and secured low interest rates on personal loans.
- Repayment History
Make it a point to pay all your bills and debts on time, and you should also meet the scheduled EMI payments or any other sort of loans. With this you can grab an amazing deal on personal loans, allowing you the opportunity to negotiate the interest rates with the lender. Think about it, who would let go of a promising applicant who has a history of paying his or her debts always on time. Hence, your repayment history can help you find low interest rate personal loans seamlessly.
- Competitive Rates
Another key factor that dictates how much interest you pay is the lender that you choose for your loan. In this competitive market, more and more lenders are featuring lucrative deals and discounts on the interest rates; the trick is to grab these offers so that you can make the most of them.
The point is: instead of sticking to the first lender or personal loan specialist that you come across, widen your horizon by researching more about current market rates, leading professional companies, potential rate of interest and then ultimately choose the one that specializes in providing low interest rates on personal loans. Though it takes some time and research, in the end your effort will be worthwhile.
- Employment History
The employment history of the borrower is as important as his or her repayment history. This is because, when an individual is backed by a stable and secured job then they can provide evidence of maintaining both good credit score and positive repayment history too. However, this will not be possible in the case where the individual does not have a fixed income. So, if you have good employment history then the interest rate on the personal loan will be lowered as well.
Bottom Line- Getting Low Interest Rates on Personal Loans
You can effortlessly get low interest rate personal loans if you are able to meet the four qualities that are mentioned above. In addition to this, there are also several leading financial specialists who strive to offer the best interest rates for applicants even with a poor credit scores, but in such cases, the loan must be backed by a form of collateral that would reduce the risk on the lender.