Personal loans come to provide financial support when you need funds to cover your life’s major expenses. These days, NBFCs have made availing of personal loans as easy as 1-2-3, which you may apply in minutes without leaving your home. You do not need to provide collateral, security, or guarantor, and the loan procedure is completely digital and paperless. However, one thing you must be concerned about while taking a personal loan is the interest rate.
The interest rate applicable to a personal loan makes a big difference in your total loan cost. The higher the interest rate, the more you will need to pay by the loan term-end. Different lenders have varying interest rates on their personal loans. For instance, you will easily find an NBFC offering personal loans for women. However, the key is to find the lender offering the best loan offer at the lowest interest rate. Here’s a guide to choosing the best interest rate for your personal loan.
Factors Affecting Personal Loan Rates:
Firstly, you must understand the factors that affect your interest rates. These include:
- Credit score
- Debt-to-income ratio
- Type of interest rate
- Repayment tenure
Tips to Get the Best Interest Rate
Now that you know the factors that affect your interest rates, you must work on them to improve your chances and get the lowest interest rate personal loan for women. Here are a few valuable tips that will work in your favor:
- Find a lender with a broader age bracket: Your age matters a lot when determining your interest rate. Lenders offer reasonable interest rates to applicants in their prime earning years. Your personal loan rates may be higher if you have just started your career or are approaching retirement age. Although you cannot change your age, you must choose a lender with a broader window for the age limit.
- Improve your credit score: Your credit score indicates your repayment history and past credit behaviour. The higher your score is, the lower the interest rate you may avail. Therefore, it is crucial to check your credit score and improve it before applying for a loan to get the best loan rates.
- Increase and show your income: Lenders want to ensure that you have enough income to pay your EMIs on time. Besides that, you must have enough savings to survive for a few months and continue paying EMIs in the case of a job loss. Try to increase your income and include all your income sources while filling up the application form to get the best loan rates.
- Have stable employment: You will get the best rates on a personal loan for women if you have a steady job with a regular income. Lenders may offer a higher interest rate if you have recently joined a job. That is why many lenders want you to be working with the same employer for at least a few months to ensure employment stability.
- Reduce your debt-to-income ratio: The debt-to-income ratio or DTI ratio is the percentage of your income you regularly spend towards your other financial obligations. These include your insurance premiums, existing loan EMIs, etc. The higher your DTI ratio is, the higher the interest rate the lender will offer you. Ideally, your DTI ratio should be under 30-40% of your monthly income. Therefore, before applying for a personal loan for women, pay off your existing loans to reduce your DTI ratio and get the best interest rates.
- Know the interest rate type: Personal loans may come with fixed or floating interest rate types. A fixed interest rate remains the same throughout the loan tenure, but a floating interest rate fluctuates with the market rate. To get the best personal loan rates, you must find a lender offering your preferred interest rate type. (check Personal loan rates)
- Choose a suitable repayment tenure: Personal loans come with flexible repayment terms. If you choose a longer-term, your EMIs will be low, but your interest outgo will be higher. However, if you choose a shorter term, your EMIs will be high, but you will save on the total loan cost. The best trick is to use a personal loan EMI calculator to select a loan tenure with EMIs you can easily afford.
Choosing the best personal loan for women with the lowest interest rate is a challenging proposition. Since there are hundreds of options to select from, you have to think about several things and figure out the best personal loan rates that work for you. Use the tips mentioned above to make an informed decision and choose the best option according to your eligibility. Once availed, you can use it for any expense, be it marriage, education, medical emergency, home renovation, vacation, etc.
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