Quick tips to obtain the best rate of interest
Posted on: 26/Jun/2019 10:19:25 AM
What is basically a personal loan? It is a kind of unsecured loan. And that is why personal loans are often offered at higher rate of interest. This interest rate totally depends on the borrower’s eligibility to avail he loan. And yet again, the interest rate in turn determines the loan amount. So, are you not curious about the factors that decide the interest rate? How does the lender fix the interest rates? What are the elements that are considered?
Of all the important factors, your CIBIL score plays the most vital role here.
Listed below are a few ways in which you can easily increase your loan eligibility.
Try your best to increase your CIBIL score
The higher your CIBIL score, the lower will be your interest rate. When your CIBIL score is high, you will be able to get personal loan at lower interest rate. This can also said the other way that the lender will decide not to approve your personal loan request when your CIBIL score is very low.
So, the question here is how to increase our CIBIL score? That is simple! Whatever is the loan amount you borrow in any form like credit cards, car loan, housing loan, etc., make sure to do timely payments of dues and interests.
Higher EMI
Do you know the fact that the EMI towards the personal loan is inversely related to the rate of interest offered on the loan? EMI is Equated Monthly Instalment. When the EMI is higher, you will have the interest rates lower. And the vice-versa is applicable as well. The more you afford to pay towards EMI month on month, the lesser will be rate of interest charged.
Do your part of online research
We of course seek the web for anything and everything. Check out the many ways in which you can reduce the interest rates. There are several blogs and forums and discussion boards that share tips. There are several Facebook groups and communities that share user case studies of the personal loan processing and individual experiences in applying personal loan and negotiating the rate of interest.
Opt for shorter repayment periods
When it comes to the loan tenor, banks prefer shorter term loans than longer ones. So with shorter loan terms, the banks will be willing to offer lower rate of interest. The reason is that in cases of longer term loans, the risk factor involved is high. For this, consider your repayment abilities and fix the loan tenure.
Floating rate of interest
What is floating rate of interest? It is nothing but the interest rate which changes according to market fluctuations. For the entire tenor of loan, there will be no change in the rate of interest in case of fixed interest rates. On the other hand, it is also a fact that fixed interest rates are quite higher than floating interest rates. So, when you go for floating rates to avail your shorter period of personal loan, it will give you good pathway to reduce the interest rate by large.
Be good at negotiating
You need to be extremely good at negotiating with the bank official to finalize the best deal. As you excel in this skill, it will be possible for you to bargain with the bank employee and finalize the best rate of interest towards the personal loan. Get advise from peers as to how you can negotiate the best. Perhaps your friend or colleague who has recently obtained a housing loan or personal loan can help you sense the mindset of the bank employee and the overall banking system so that you can follow winning strategy in negotiation.
What is the overall loan cost?
You need to calculate the exact amount you are borrowing from the bank. It is not just advantageous for you to opt for lower interest rates, but you should also consider the other aspects such as charges imposed towards processing, late payment penalty charges, etc. In a few cases, the pre-payment may be high – have a keen eye on it. Make sure to think twice ahead of accepting the loan offer.
We believe these tips will help you in obtaining loan at the best rate of interest. All the best.
