In today’s fast-paced digital world, getting a personal loan has become easier than ever with the help of online platforms. Personal loans are generally taken to cover your urgent needs, such as home renovation, sudden wedding expenses or sudden business expenses. However, many applicants struggle to repay the loans due to high EMIs. But, with the right planning, you can significantly reduce the interest rate on the loan. If you are looking for a personal loan app tamilnadu or in any other area, it is essential to explore ways to reduce the rate of interest applied on the loan and make it cost-effective.
Let’s explore some of the effective strategies to decrease the interest rate on the personal loan:
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Maintain a High Credit Score
Your credit or CIBIL score is one of the most important factors considered by lenders when approving your loan. A credit score determines your creditworthiness and helps lenders decide whether to approve your loan at a lower interest rate or not. Anyone with a good score (potentially more than 750) gets quick personal loans at lower interest rates and at favourable terms and conditions.
You can improve your credit score by
- Repaying EMIs and credit card bills on time.
- Using the credit limit below 30% and keeping the credit utilization ratio low.
- Avoiding apply for multiple loans in a short period of time.
When applying for a loan via a personal loan app for self employed, be sure to check your score and improve it to get better rates.
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Choose a Shorter Tenure
Lenders charge lower interest rates to applicants who choose to repay loans in a shorter period of time. Opting for a shorter tenure even helps you save money on extra interest, making the personal loan cost-effective and budget-friendly. However, make sure to choose a tenure that suits your financial situation. You can even use an EMI calculator available on a personal loan app for self employed to efficiently calculate monthly EMIs and ensure they align with your budget.
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Explore and Compare Your Options
Do your research and look for lenders that are reputed and offer easy loans at competitive rates. There are lenders that prefer to provide loans at lower interest rates by assessing your income stability, credit profile and repayment history. Read the terms and conditions and pay special attention to points that include information about processing fees, prepayment penalties, and other additional charges to make sure you don’t have to face a repayment burden.
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Maintain a Good Debt-to-Income Ratio
A ratio that determines how much you spend on your monthly debts as compared to the income earned. The ratio analyses your financial health, and many lenders analyse your ratio to determine your ability to repay the loan in time. Make sure not to apply for multiple loans and credit cards when applying for a loan via a personal loan app for self employed.
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Negotiate with Your Lender
If you have a good credit history and are a loyal customer of the lender, you can negotiate for a lower interest rate. Many financial institutions and NBFCs are willing to adjust interest rates if you have a long-standing relationship and have strong repayment records.
Final Thoughts
It is concluded that lowering interest rates requires strategic planning. One way to do this is to use a trusted personal loan app for self employed people like Bajaj Finserv, which provides loans with zero collateral and offers personalised deals at a competitive interest rate.
Make sure to apply the strategies mentioned above and increase your chances of getting a personal loan at better interest rates and fulfilling your financial goals.