Getting lower interest rates is not as easy as you may think!
Let’s see how you can get the desired personal loan interest rate in Jan 2022 without pleading too much :
Often taking a loan can take a financial toll on you. It is especially important for you to understand your specific needs. You need to realize that you will have to pay back the borrowed amount with added interest. So, only after making sure that you need the funds urgently for a short period and you are financially capable of paying it back , should you apply for an instant personal loan.
In many cases, you have to pledge your financial property in order to obtain a loan. In such cases, personal loans are the best option. You can easily borrow desired loan amount without pledging anything. All you need is a good credit report, income, and legitimate documents.
Getting approved for a instant personal loan is not as easy as you may think, the biggest factor that comes into play is your credit score. Now there is a certain
hierarchy banks follow when it comes to your credit score. Higher the credit score higher the chances of getting approved. Let’s see how:
|Credit Score||Chances of getting approved||Credit Rating|
|300 - 599||You may not qualify||Poor|
|600 - 750||Your loan may get approved but at a higher interest rate||Average|
|750 - 799||Not only will you get approved but might also get it at lower interest rate||Good|
|800 - 900||You can get approval for a higher loan amount with lower interest rate and quick disbursal||Excellent|
Since the banks and lending institutions do not ask you to pledge a collateral, the lender carries the risk of losing money in case you fall back on your payments. That is why lenders go through your Credit Report, so that they can evaluate your credit history and track your repayment behavior from the past. This gives them an idea of your financial habits so that they can identify any potential bad debts. Usually if you have a good history, banks are lenient with the disbursal of funds. Not only will you get approved quickly, you can also negotiate for a lower interest rate and a higher loan amount.
Lenders are mostly looking for borrowers who have a credit score of minimum 750. A score above this denotes that the borrower has been diligent with borrowed funds. So, borrowers from this category do not fall in the high-risk category. The important thing to do here is to check free credit score online regularly to stay ahead in the game.
If you go for a personal loan which has a fixed rate of interest, you will be charged a constant rate of interest throughout the loan repayment period. In case of floating or variable rate of interest is based on the Marginal Cost of Lending Rate or the MCLR, causing the interest rate to fluctuate as and when the MCLR changes.
The most important benefit of opting for a fixed interest rate is that you know exactly how much you will have to pay during the tenure of repayment. So, if you wish to plan your finances in advance, you can go for a fixed interest rate.
In case a fluctuating rate of interest does not bother you, you can opt for a floating/variable interest rate. The benefit of opting for a floating interest rate is that your repayment amount will reduce when the interest rate is low.
When you opt for a personal loan at a flat interest rate, the interest is calculated on the total loan amount throughout the repayment tenure. In contrast, if you opt for a loan at a reducing interest rate/reducing balance rate structure, the interest is only calculated on the outstanding loan amount. So, in this case, when you make a monthly repayment, the interest for the remaining of the repayment tenure will be calculated on the outstanding loan balance.
The interest rate charged by the banks and lending institutions are based on multiple factors. You can easily check and compare various interest rates levied on different personal loan products online, to check click here
The interest rate charged by your lender will have a significant impact on the monthly EMIs. So, it is particularly important for you to calculate the EMIs beforehand. This will help you decide how much you need to save every month.
At CreditKaro, you can use the personal loan EMI calculator tool to know your monthly EMI.
In order to access the EMI calculator, you simply have to visit our website and go to the ‘EMI calculator’ tab. After you click on the tab, you will be directed to the EMI calculator page. Once you are there you can fill in the required details to get relevant information.
Formula to calculate EMI
EMI = [Px RX(1+R)^N]/[(1+R)^N-1], wherein P represents the loan amount,
R is the interest rate charged per month, and N indicates the total number of monthly installments.
Besides your interest rate, there are a few more charges which are included in the total cost of the loan:
There are a few lenders may charge you a fixed fee for this facility. The prepayment fee is usually calculated in two ways: