One can use multi-purpose loans to provide finance on various occasions. Be it a medical emergency or higher education. You can use small personal loans to satisfy certain situations compared to any secure loan like a car loan or a home loan. The personal loan interest rate is affordable. While you apply for any personal loan, it is recommended that you compare various lenders before choosing the loan amount.
Diverse Factors Of Personal Loan Interest Rate
Here are the diverse factors that can affect the interest rate of a personal loan.
Credit history is an important factor that one considers while processing a personal loan app. Every credit bureaus maintain this. If the credit score of an individual or a business is above 750, then it is considered healthy by any lenders. On the other hand, the lender may not approve the personal loan application if anyone has a low credit score. Hence it is important to take care of the credit score to get a quick personal loan.
The level of income plays a major role while affecting the personal loan interest rate. For instance, if you have a higher rate of income, then you will have to pay a lower interest rate. It is because, with a higher income, you would be considered to be a reliable customer by any lender. So, for example, if you have an income of 25000 INR per month, the lender would offer you an interest rate of 14%. But if a person’s income is 70000 INR per month, they might get an interest rate of 12% from the very same lender.
If you have defaulted in your profile, the lender would invariably charge you a very high-interest rate. Sometimes your application might get rejected due to such defaults. However, most of the lenders prefer customers who have had negligible defaults for the last 12 months.
Interpersonal relationship with the bank
The Indian customers tend to open up fixed deposit account, and savings account in the same bank. It makes them loyal customers to those banks. It helps them to share a good interpersonal relationship with the bank. Due to this reason, such customers can fetch attractive rates of interest while taking up personal loans. The old customer becomes beneficial when getting a low-interest rate on any small personal loan.
Repayment history also comes while getting aloe vera interest on any personal loan. With a good repayment history, you will get faster loan approval and lower interest rates. When the lender sees that you are quite disciplined with your repayments, the lender will not hesitate to provide you with the loan with a low-interest rate. Before taking the loan, you can also try to check the monthly EMI with the help of an Online Personal Loan EMI Calculator.
The organization’s reputation also plays a vital role while determining the interest rate of any personal loan. If your organization is stable and renowned, you will get a lower interest rate on the personal loan. It happens because the bank tends to perceive that the employees of the renowned organization would have a stable career. Therefore, it makes them very much responsible when it is time to pay the debt.
A personal loan, at times, might feel alluring. But after evaluating the good scenarios, one must step in for the application procedure. The interest rates of the personal loan play a major role. It is because it affects the requirements of the borrower. In the case of secured loans, the interest rate is more or less fixed, but for personal loans, it varies depending on these factors. Hence before you take up any personal loan, you should consider these factors and check the interest rate after using the interest rate calculator online.