Simple Ways to Get a Lower Interest Rate on Your Personal Loan
Personal loans are a great way to gain access to funds at the time of a financial emergency. Emergencies such as wedding expenses, medical bills, higher education, travel costs, house repairs, etc. The interest rate of personal loans is generally high since the funds received can be used to meet any type of financial requirement. Most of the lenders do not mandate the borrowers to submit any collateral or security for securing a personal loan. In such a case, the rate of interest is even higher since the risk associated is more. However, there are ways that you can use to reduce your personal loan interest rate. Learn about the steps you can take to get a lower interest rate when applying for a personal loan:
Shop smart for your personal loan
When applying for a personal loan, it is important that you check the rates offered by multiple lenders in order to find the best deal. There are multiple aggregator websites available that offer customers the platform to compare and find the best product that suits their requirements and circumstances. For Example : You can also visit the official website of BankBazaar and compare the personal loan products offered by various lenders. In order to find the one that matches your needs and has the lowest possible interest rate.
Maintain a good financial profile
The financial profile of an applicant plays a crucial role at the time of personal loan application. Maintaining a good financial profile projects that a borrower ensures that you get a lower interest rate when applying for a loan. In order to keep a good financial record, you must pay all your debts and uphold a good credit score. Lenders generally tend to offer lower rates to candidates with a good financial record in a bid to get them onboard.
Choose a lender with a standing relation
In order to get a lower rate of interest on your personal loan. It is wise to apply for the same at a financial organization with which you already have a standing relationship. If you have taken a loan from a lender, they already know about your financial history. They also know what kind of a borrower you are. Hence, you might be able to get a better deal while applying for a new loan from the same lender.
Opt for the balance transfer facility
If you have already availed a personal loan, you might be able to transfer the outstanding loan to a new lender with a lower interest rate. However, before you decide to avail this facility, you should make sure that the total amount you pay as interest once you transfer your balance does not exceed the original interest amount.
Put your negotiation skills to use
When you apply for a personal loan, you will have to provide your personal details including monthly income, age, current employer, etc. Using this information, lenders calculate your applicable personal loan interest rate. However, if you have a high credit score, you might have a better chance of negotiating with the lenders to offer you a lower interest rate.
Reduce the amount you pay as interest
Even if you are not able to reduce the rate of interest on your personal loan. You can take certain measures to reduce the amount that you pay in the form of interest to the lender. You can opt for the prepayment option to significantly reduce your principal amount. Since interests are generally calculated based on the amount of principal borrowed. This will reduce the interest amount that you are charged.
Apply for a personal loan at the end of the month
Personal loans are sold by salesmen who have fixed targets for every month. When you apply for a loan at the beginning of a month, these salesmen might not be open for negotiation. However, as the end of the month approaches, the salesmen get anxious to meet their targets. They might be more open to bargain at this time as opposed to the beginning of the month. Hence, if you apply for a personal loan at the end of the month, you might be able to haggle for a lower interest rate.
Opt for a secured personal loan
In most cases, borrowers are not required to submit any collateral or security to get a personal loan. This increases the risk for the lender to incur losses. Due to this reason, the interest rates for such unsecured loans are usually higher. However, if you provide a collateral or security when applying for a personal loan, the risk associated with the transaction is reduced significantly. It causes the lender to provide a lower interest rate.
While there are numerous ways through which you can reduce your personal loan interest rate, you can opt for the one(s) that best suit your requirement and situation. You can also get in touch with a personal aggregator in case of any doubt for unbiased advice.