4 Factors That Affect Your Personal Loan Interest Rate
Personal loans come with no end-usage restrictions and help borrowers conveniently meet their personal and professional financial requirements. Subsequently, there has been a rise in the number of such advances availed due to features like instant approval and quick disbursal.
Now, considering that these loans come with an attractive personal loan rate of interest across a conveniently flexible repayment tenor, they incur pocket-friendly EMIs. However, since these are unsecured loans, lenders consider multiple factors before offering and settling upon the rate of interest
- Credit and Payment History
Reputed NBFCs look into the credit history of prospective borrowers and decide their creditworthiness based on their CIBIL score. It reflects the repayment capability of an individual. A higher personal loan interest rate if the CIBIL score is below 700. A lower interest rate for in case credit score is around or above 750.
Thus, in case you are looking ahead to avail a personal loan, make sure to check the CIBIL score and make timely payments to improve your credit score throughout the tenor.
2. Existing Relationship With the Lender
Approaching a financial institution as an existing borrower or customer ensures a convenient negotiation of the personal loan interest rates. While the lender has a prior notion regarding your repayment capability and timing, your chances of availing a lower rate of interest increase.
3. Current Income
One of the chief elements that enable potential borrowers the power to negotiate over the interest rate is his/her current income, and financial obligation. A higher monthly salary and a lower FOIR (within 30%-50%) ensure that a lender charges you with a lower rate of interest on your personal loan.
4. The Reputation of Your Employer
The reputation of the brand or organization where you work plays a crucial role in determining the rate of interest in your advance. It is because, in the case of employees involved with reputed brands, lenders are more assured of the borrower’s responsibility towards his/her repayment capability.
While these determine the interest rate on your personal loan, also make sure to compare the various lenders and opt for the one that offers you the latest rate. It guarantees you a lower cost of the loan and convenient EMI options.
Must Read: 4 Factors that Affect Your Personal Loan Interest Rate
