Unlike most financial products, including home loans, the interest rate of the personal loan varies from one body to another. The personal loan is said to have fluctuating rates of interest. Some of the banks offer 13 %, whereas others may offer 9.5%. The personal loan interest rate, however, depends upon the eligibility criteria. If you are planning to apply for a personal loan, you need to understand the factors that help to determine the interest rate of this quick loan.
Interest rate comparison
In this world of digitalization, comparing the rate of interest before applying for the loan amount becomes easy. Hence one needs to do thorough research before sending the application form for your loan amount. Moreover, if you are planning to avail of a quick loan, you need to evaluate the various features of the financial product. These features include the repayment tenure along with the processing fees and prepayment charges. If you are satisfied with all these, you should finalize the lender to get the loan amount. Moreover, the best personal loan interest rates are the benchmark that helps you compare the other lender’s interest rates on the personal loan.
Credit score plays an important role.
A credit score happens to validate your performance concerning your credit card for a previous loan. If you can make timely payments, then it will provide you with an added credit score. Moreover, defaults on late payments somehow can bring down the score. One needs to maintain a score of at least 750 or above to get the various benefits. If any borrower has an impressive credit score, the lender might offer better terms on the loan.
The monthly income of the borrower
Every lender tends to prefer borrowers who have a higher monthly income. The reason behind this is an individual who earns more has a good repayment capacity. Higher-income also implies great affordability for the loan amount. Some financial institutions offer loan refinancing for those individuals who tend to meet the simple eligibility parameters. Besides, if you live in a metro region, you need to have a salary of at least Rs. 35000. Moreover, if you live in other cities, you can take a personal loan with a low monthly income.
If you are employed, and your employer happens to be someone reputable, it can prove beneficial for you. Those working for good organizations can be considered responsible and stable during the time of EMI payment. Hence the nature of the employment tends to impact the personal loan interest rate. For instance, a salaried employee might get a rate of interest completely different from any self-employed professionals. Also, the borrowers nearing the retirement age need to pay a higher interest rate for getting quick loans.
A good relationship with the bank
Various banking financial institutions and non-banking financial institutions offer special benefits and privileges to their customers. It includes some pre-approved offers and special deals. Especially if you are an existing customer and have a good repayment record, you would be eligible for the various rate benefits. However, the borrower can also experience the faster processing of the loan amount.
Besides, these factors impact the interest rate of the quick loan. Once you understand these factors, you can get a lot of help while choosing the right time to apply for a top-up loan. Alternatively, you can also apply for the loan amount once going through the eligibility criteria. On approval, you can get the deposit of the loan amount within 24 hours*.