Ways to Avail the Best Personal Loan Rates - A Guide

Low-interest personal loans are best for tackling contingency financial situations. A personal loan from private finance in Delhi can help you book your dream travel destination, buy a car, or finance your child’s higher education. However, it is important to avail a loan at the best competitive rates. The interest rates on a short term personal loan are usually lower than those on other unsecured debt, such as credit cards. As per the most recent consumer credit report from the Federal Reserve Bank, the average personal loan rate is 9.76%, which is well below the average rate of 14.89% on interest-charging credit card accounts. Here are a few steps to help you find the best personal loan rates:

1. Maintain Good Credit Score
Your credit score is reflective of your creditworthiness, which is a track record of how you have managed your credit in the past. If you have a credit score of over 700, you are an excellent candidate for availing a personal loan. The higher the score, the lower the interest rates levied upon the loan amount. Lenders decide the repayment terms, loan amount, and interest rate based on your credit score, hence a higher score gives you an upper hand in negotiating loan terms.

2. Compare Lenders To Get The Best Offer
Prior to applying for a personal loan, you should carry out intensive research and compare lenders in the market. Although it is a time-consuming process, it will help you make an informed decision and avail the best offers. Some lenders are more lenient compared to others, as they might be willing to provide larger loan amounts despite bad credit. Opt for a loan offer that suits you best.

3. Compare Personal Loan APRs
While interest rates make up a significant chunk of your loan cost, other hidden costs include origination fees, application fees, and other miscellaneous costs. You can start your calculation by comparing the annual percentage rate (APR) for each personal loan offer – APR includes all fees, hidden costs, and interest rates and is an authentic indicator of your cumulative loan costs. Make sure that you are not paying more than you bargained for.

4. Choose Shorter Personal Loan Term
The shorter the term, the harder it is for you to fall into a debt trap. Lenders tend to reserve their best personal loan rates for short term loans, that need to be repaid within 5 years or less. A short loan tenure will allow you to borrow a manageable amount, which you can repay easily without spiraling into debt or bankruptcy.

5. Look For Seasonal Offers
Lenders often notify customers regarding special loan offers via SMS or email. Keep your eyes peeled for these offers, as they can help you save a significant amount. These offers allow you to avail limited-period discounts, especially during the festive season. Resultantly, you must take advantage of the same.

6. Leverage Upon Your Professional Credentials
If you draw a decent salary and work for a reputed public or private sector company, you will be automatically viewed as a stable, reliable borrower. Use this to your advantage to negotiate lower rates of interest. Your company’s reputation can help you attain the most lucrative loan offers, as the lender is assured that you have the financial means to make payments on time.

7. Consider Secured Personal Loan
In a general sense, personal loans are unsecured loans that do not require collateral. On the other hand, a secured loan is guaranteed by collateral, which is a valuable asset owned by the borrower. You can avail secured personal loans with the help of assets, such as home equity, auto equity, savings, or investments. This serves to lower risk for the lender and makes it more likely for them to approve bad credit loans. Also, the lender might consider offering lower interest rates if the account is secured by an asset.

8. Add Personal Loan Cosigner
If you have a credit score between 580 and 680, lenders might levy exorbitant interest rates on your personal loan. You can avoid this by borrowing good credit off someone you trust, by asking them to cosign your personal loan. When you add a cosigner to your personal loan application, the lender considers the credit history of your cosigner, along with your own. This way, you will be able to access better interest rates despite having low or bad credit.

Keeping these tips in mind, you can find the best rates on a personal loan. Make the most out of your credit score, and work consistently towards maintaining stable and lucrative economic conditions.