According to data excerpted from RBI, personal loans accounted for 28% of bank credit as of February 2020. These usda financing options are suitable for a range of expenses, from home renovation to medical emergencies. The sizable sum and quick approval let individuals benefit significantly from a personal loan.
However, individuals should also pay attention to the necessary aspects that impose liabilities on them. Repayment tenure and interest rates are vital elements borrowers should be aware of from the very beginning to handle their finance smoothly. Following is a list of essential facets of personal loan rates that every borrower should look out for before availing of the loan.
Factors that influence personal loan interest rates
These rates are mainly decided by the lending institutions based on a few factors, and they look for certain information about the borrower before determining the personal loan interest rate. These factors include:
During the application process, individuals inevitably come across the eligibility criteria set by these financial institutions, which also involve disclosing their annual income. Borrowers with high disposable income easily get lower interest rates since the risk associated with lending is lesser in this case.
Nature of employment
It is also necessary for the lender to know if the borrower has a steady job to maintain the monthly installments and repay the loan. Therefore, before you apply for the best personal loans out there, make sure you have a stable income flow and job to back yourself up.
Decent CIBIL score and good terms with the lender
This falls under one of the eligibility parameters that applicants need to meet. Individuals, not having a CIBIL score of 750 and above are seldom approved for a loan by the lender.
Apart from that, having a good relationship with financial institutions is also conducive to grab attractive interest rates as financial institutions as they are already aware of such applicant’s credibility. Therefore, it is necessary to choose the right personal loan lender to smoothly handle loan interest rates.
By keeping these factors in mind, borrowers can easily obtain a sizable fund to meet their financial requirements. Additionally, in order to get an idea of the total loan value, one can also use a personal loan calculator that specific lending institutions offer.
Regular charges along with your personal loan rates
It is not only important to check the interest rate beforehand, but also additional fees that you will be required to maintain for the entire loan tenure. It is advisable to compare these charges offered by different lenders before making a choice:
- Processing fee: It’s a one-time fee that a borrower needs to incur when they avail of the loan. Individuals shall inquire about this charge before they take out a personal loan.
- Pre-closure charges: Some of the popular lenders have certain rules including pre-closure charges, which you need to pay if you repay the outstanding amount before the loan tenure ends. It is important to look out for these additional charges as it eventually increases your liability.
Renowned NBFCs like Bajaj Fiserv also come up with pre-approved offers to make financing less time-consuming. You can find these offers available on several financial products like Bajaj Fiserv personal loans, business loans, etc. All it requires is your name and contact number to check your pre-approved offer.
Apart from all these attractive offers and schemes, there are certain important things to know before signing a personal loan agreement. From additional fees, taxes, to better ways to reduce those personal loan rates, these details are required to handle the monetary crisis without letting additional liabilities on yourself.