Are you a young couple looking to apply for low-interest personal loans to fund some sudden expenses or a planned vacation? If yes, you need to do some good research about the various lenders and their terms and conditions besides ensuring that you meet the eligibility conditions. Here are some tips that can help in getting the lowest personal loan interest rate. You can even apply jointly for a loan to enhance your eligibility.
- Apply to Few Lenders Only– Rather than submitting personal loan applications to multiple lenders, it is best to apply to only one or two whose eligibility conditions you meet. This can be done by checking the websites of various banks and lenders and comparing the terms and conditions. Different lenders have different requirements related to age and monthly income besides the stability of income. Check the personal loan eligibility norms for several banks and apply only if you are eligible. This will not only boost the chances of your loan getting sanctioned but also reduce the impact on your credit scores. Every time you apply for a loan, the lender goes for a hard inquiry that results in some reduction in your credit score.
- Have a Low Debt to Income Ratio– One way to ensure that your personal loan application will be approved is to maintain a low debt to income ratio. This means that before applying for a fresh loan, pay off your existing borrowings and have a clean record. Ideally, the total amount of EMIs that you are paying should not be more than 40% of your income. Ensure that your debt to income ratio is within limits so that you are eligible for low-interest personal loans.
- Ensure a Good Credit Score– The unsecured nature of personal loans makes lenders wary of lending to applicants with low credit scores. You can improve and maintain your credit score by reducing your borrowings, paying off the EMIs and other dues on time. A credit score of above 700 is viewed favourably by the lenders and a score below this may result in an outright rejection of your loan application. Some lenders may be willing to lend but at much higher interest rates.
- Club All your Income Sources- You can enhance the chances of your personal loan application approval by applying jointly and clubbing all the sources of income. This means including the salary income of all the applicants plus income from other sources like rent or consultancy income or anything. The lenders prefer applicants who have a good and stable source of income to pay the EMIs on time.
- Borrow Only What Your Need- Borrowings of any type can pressurise you to save more and spend less. So, if you are planning to take a personal loan, assess your needs carefully and apply for a loan amount that you need and not are eligible for. You can even use a personal loan calculator to check the amount of EMIs that you will have to pay for a specific loan amount. This will help you decide on the loan amount and the duration of the loan.
To conclude, these tips will help you improve your chances of getting a personal loan at low-interest rates.