3 Tips To Avail Personal Loan at Lower Interest Rate
Personal loans are collateral-free, unlike secured loans sanctioned against an asset. Hence, the risk involved with personal loans is also high. There is no way a lender can recover the outstanding amount if the borrower defaults.
So, financial institutions charge high-interest rates to compensate for this risk. However, there are ways in which you can avail a lower rate of interest.
Some of these are –
- Improve Your CIBIL Score
Lenders need a minimum CIBIL score of 750 to approve an unsecured loan like a personal loan. A high credit score vouches for your creditworthiness. Hence, it can also help you avail a lower rate of interest.
You can improve your CIBIL score by availing a credit card. Using the card responsibly will increase your credit score quickly. Make sure to pay the total amount payable within the due time and keeping the utilization within 30% of your credit limit to improve your score.
2. Maintain a Clean Credit History
A credit report that does not have any defaults and late payments can help you secure lower payments.
Make sure to check your credit report before you apply for a personal loan. Many a time, discrepancies and errors can occur on your previous lender or credit company’s part. These mistakes can cause your new lender to increase the personal loan interest rate or deny your loan application.
3. Opt For Shorter Tenor
Opting for a shorter tenor can make your EMIs expensive. However, the same lower your cost of the loan. Shorter tenors can also help you avail a lower rate of interest.
Repaying the loan quickly can help you avoid paying interest on the remaining loan amount.
Follow these tips to avail low personal loan rate of interest when applying for a personal loan. Ensure to submit all necessary documents and fulfill all the eligibility criteria for a quick approval.
Must Read: 7 Tips to Avail a Personal Loan at a Lower Interest Rate
