Personal loans are among the more popular financing options available today. They are easy to avail of and usually get disbursed quickly – often coming to our rescue in case of a financial emergency. Besides, as most personal loans are unsecured offerings, you are not expected to pledge any collateral to get one.
However, since these do not require any collateral, the terms on your personal loan- interest rates, fees and charges, and other overheads may be higher than their secured counterparts.
The ideal approach for borrowers is to scout for a low-interest personal loan to reduce the cost of borrowing. And getting better terms on your personal loan is not as complicated as it may seem. You need to leverage your financial profile and have a basic understanding of how the approval process works.
To help you with this, here are five factors that can help you get better terms on your personal loan.
1. Maintain a high credit score
Your credit score or CIBIL score not only forms an important part of your eligibility, but also plays a big role in determining the terms of the loan offered to you. Most lenders have a minimum CIBIL score requirement of 750for approval of your personal loan application. Based on your score, lenders assess the risk you pose as a borrower. This, in turn, has an impact on the loan amount, interest rate, and other terms offered to you.
2. Stable professional credentials
Your income, employment history, current employer, and other professional credentials are important to lenders as they affect your ability to make timely payments. Therefore, it is important to maintain employment at a reputed organisation and not to switch jobs immediately before applying for a personal loan. Remember that lenders gauge your risk quotient based on your salary, place of work, and more. A low-risk, trustworthy borrower is more likely to get a low-interest personal loan.
3. Clean repayment record
Your repayment track record is important to lenders as it indicative of whether you’re a responsible borrower or not. This information is available in your credit report and lenders consider it as part of their protocol. Here, having a history with no missed payments instills trust and positions you as a low-risk borrower. As a result, lenders are more likely to offer better terms on account of your ability to make timely payments.
4. Seasonal offers
A good way to get a lower interest rate on your personal loan is to opt for lenders with seasonal offers. These may be offered during festivals or the beginning and end of the financial year and come with slashed interest rates. These low-interest personal loans can be much more affordable as they come with lower than standard rates. Watch out for them!
5. Relationship with the lender
Your relationship with the lender is another factor that can influence the terms you get. Existing customers with good standing with the lender are more likely to have access to special offers or can negotiate for better terms easily.
Getting a personal loan at favorable terms can be simple if you pay close attention to these 5 factors and play to your strengths. Some of the best personal loan lenders offer competitive interest rates from the get-go and having an outstanding profile simply helps you get a better interest rate on a personal loan.
Bajaj Finserv, one of the most diversified non-banks in the country, offers personal loans up to Rs.25 lakh with attractive features such as competitive interest rates, transparent charges, and flexible tenures.
Additionally, for added all-round flexibility, you can opt for the Flexi Personal Loan variant. Here, you can borrow from your sanction as many times as needed and pay interest only on the amount withdrawn. You can also opt to pay interest-only EMIs and reduce your monthly outgo by up to 45%. This feature helps you borrow smartly and control your interest outgo efficiently. To enjoy the benefits of this personal loan, apply online, and get instant approval within minutes.