Financial emergencies creep in unannounced, and one of the best ways to address them is by opting for instant financing options like personal loans. This credit instrument offers many benefits like zero end-use restrictions, no collateral, easy repayment, and many more.
- As per a recent report, these are the factors that drive the personal loan growth rate, and it stands at 11.2% in July 2021.
Nonetheless, being collateral-free credit, the personal loan interest rates can be steep at times. However, individuals can adopt some tried and tested tips that help them secure the most competitive interest rates against their borrowings.
Ways to avail of the best personal loan interest rates in 2021
The borrowers can follow the tips below to secure the best personal loan interest rates.
- Maintain a high credit score
The credit score and history help lenders to understand if applicants will repay a loan on time or not. The higher the score the better is the credibility. Hence, if an applicant has a high CIBIL score, lenders assume that the lending risk is low, offering the lowest interest rate personal loan.
Usually, 750 and above is considered as an ideal CIBIL score for a personal loan. However, in case individuals have a score lower than that, they can follow the tips below to boost it:
- Refrain from applying for multiple debts at a time
- Clear the existing debts faster
- Keep the FOIR below 50%
- Never miss EMI or bill payment
- Ensure a lower credit utilization ratio below 40%
These are some factors applicants can consider in order to keep their credit score high and eventually secure a competitive interest rate against their personal loan application.
- Maintain a steady source of income
Lenders also decide the personal loan interest rates after assessing the monthly income of applicants. It helps them understand the repayment capacity of borrowers. For instance, if the FOIR of an applicant is more than 60%, then his/her disposable income is less, which will reduce the repayment capabilities of a debtor.
In such cases, lenders are likely to reject the application or impose a higher interest rate. However, you can also opt for a small personal loan if you have a budget and want to secure the best interest rates. Such loans are easy to repay and available at unbeatable interest rates. Usually, the small-ticket personal loans (STPL) segment is regulated by NBFCs and –
- STPL borrowers constitute half of the personal loan accounts in India. The average ticket size in FY21 is 1.5 lakh.
However, the income requirement varies with lenders and an applicant’s city of residence. Hence, you should know how to manage your personal loan EMI repayment efficiently before applying for it.
- Meet lender-specific eligibility
Besides CIBIL score and income requirement, individuals also need to fulfill the eligibility criteria set by a lender to avail of a personal loan. Doing so also puts an applicant in a position to negotiate a reasonable interest rate. Some of the common requisites for this credit include:
- Applicants should be 20 to 60 years old
- Must be salaried employees working at reputed MNCs or public or private organizations
- Should be residing Indian citizen
Alongside, individuals should also submit the list of required documents to prove their eligibility.
- Compare different lenders
Personal loan interest rates vary with lenders. Hence, applicants must compare different lenders to opt for the best interest rates and terms of services. To simplify the process, they can also take the assistance of an online personal loan EMI calculator.
Selected financial institutions like Bajaj Finserv offer personal loans at competitive interest rates and also this online tool for borrowers to use.
Besides, individuals should also know how to get a personal loan with this NBFC.
For instance, apart from the online and offline procedures, they also extend pre-approved offers to their existing customers. These expedite and simplify loan processing. Such offers are available on a host of financial products like personal loans, business loans, etc. Enter your name and contact number to check your pre-approved offer online.
- Opt for the Flexi loan facility
Although not directly associated with the rates, individuals can reduce their interest burden with a Flexi loan facility. With this option, individuals can withdraw funds multiple times from a pre-sanctioned limit. Moreover, the interest is levied only on the funds utilized. Hence, one can benefit from Flexi personal loan by reducing EMI as well as interest burden.
Similarly, individuals can further save on interest payable by opting for part-prepayment. Selected NBFCs offer part-prepayment and foreclosure facilities at zero to nominal charges.
Hence, these are some most effective ways to secure the best personal loan interest rates in 2021 and the coming years. Additionally, individuals can also opt for a shorter tenor to reduce the interest outgo. However, in this case, the EMI will be higher; but the total borrowing cost will be affordable in the loan run.
Therefore, if you can afford higher monthly installments, you can save a few extra bucks on personal loan interest payable.
Personal loans have been among the top go-to financing options for funding a host of different expenses, urgent and planned. With the increasing popularity of this financial product owing to its features, it has extended financial freedom to individuals across different income strata.
The RBI’s data also reflects this popularity as personal loans have grown 11.9% in June 2021 compared to 10.4% in the previous year.
Moreover, personal loan application has become hassle-free with online procedures. At the same time, one can enhance the overall chances of loan approval with a few simple tips in mind.
To avail the best interest rates for affordable financing, one needs to dig deep in the market for available offers with widespread research. It is advisable that borrowers start with checking loan availability with different lenders and compare them based on various parameters.
You can proceed to send your personal loan application to lenders like Bajaj Finserv that also provide pre-approved offers.
These pre-approved offers simplify the process of availing of finance, making them quick and convenient. The offers are available on financial products like business loans, credit cards, personal loans, etc.