A personal loan is a quick escape to meet any need or emergency. It offers you quick access to funding that you can use for anything as that has no fixed restrictions. For every loan amount, you pay a certain amount of interest along with the loan amount. You may have a question, why you end up paying more and more on your principal amount? Your principal amount remains the same, but your rate of interest keeps adding up and your loan amount gets doubled up. A personal loan is very easily available in the market and you can easily get an instant personal loan without any hard-work. However, you would certainly not like to pay extra money along with your EMI, right? You need a low rate of interest. How can you get a low-interest rate on your personal loan? This guide will give you an insight into how you can avail of a personal loan at a low rate of interest.
Ways to get a low rate of interest Personal Loan
- Credit score: A good credit score gives your loan provider an assurance that you are an asset. Offering you a loan will be right or wrong for the provider is decided with the help of a credit score. A credit score is a three-digit score that determines your credit condition and credit history. It takes into account all your past transactions, bill payments, and account details. A good credit score means you have handled your finances well and offering you debt is safe. If your credit score is impressive, you can negotiate on the grounds of the low rate of interest. Similarly, a bad credit score may get you a loan but to cover up the risk, the loan provider will charge you a high rate of interest. If you are looking out to pay less then work on your credit score.
- Use collateral: If you secure your personal loan, you will get a low rate of interest. The moment you make your loan with a secured one, you can go along with a low rate of interest. If you are offering a property as a security, it is a safe way to offer you a loan. There is no risk because if the borrower does not pay back, the loan provider can seize the property. If you use a property to get a loan, you can easily go for a low rate of interest. It is easy to get approval and there is room for negotiation. Do you have a vacant property? If yes, use it to get instant approval with a low rate of interest.
- Loan tenure: Loan tenure will help in deciding your rate of interest. If you are going for a low tenure, your rate of interest will be very high. Due to the less tenure, the loan provider will charge you a good rate of interest to fetch out maximum profit behind borrowing. For a long tenure, the rate of interest is high because you pay interest for a long period of time. The personal loan provider can easily adjust the profit if one is going for a long tenure.
- Negotiation: There is always room for negotiation if you are on good terms with your loan provider. If your score is good and you meet all other eligibility criteria you can negotiate. Why not use good words if that decreases the burden of high EMI? Using your good credit score and other eligibility criteria make sure you are able to convince your loan provider to offer you a low rate of interest. Use negotiation as a tool when everything else fails.
- EMI: If you are going for a small amount of EMI monthly, you end up paying more rate of interest. It will be a headache over the years and you end up paying more than you can even think of. Paying off a good amount will low down the EMI burden within a short period of time. The more you lag your loan tenure the more you will end up paying the rate of interest. If you go for a short period you can finish off paying the rate of interest within a short period of time. Don’t go for a low amount of EMI as that can mislead you to pay extra for a good number of years.
A personal loan can get you out of any emergency. It helps you to build wonderful experiences and memories with your loved ones. Be it an abroad tour or a medical emergency use a personal loan calculator to keep track and deal with numbers easily.