Instant personal loans are a great weapon to fight against any financial obligations. They are unsecured which means no need to pledge any assets to avail of a loan which makes them a popular choice among millennials. But due to their collateral-free feature, personal loans come with a high-interest rate. Thus, the interest rate on personal loans is a crucial factor to consider.
The rate of interest on a quick personal loan is the interest rate at which the lender approves the loan application. The higher the rate of interest, the higher will be the loan cost resulting in higher monthly EMI. Personal loans are provided by multiple banks and non-banking financial institutions. Lenders offer attractive benefits to the borrowers and interest rate is the major one that people mostly focus on.
Factors that impact personal loan interest rates are –
- Credit Score
- Your age
- Employment type
- Your financial profile
- Annual income
Thus, if you have a good credit profile and stability in your work life, then you may get a lower interest rate on a personal loan.
Factors That Affect Personal Loan Interest Rates
Check out the below factors that affect your loan interest rate –
- Credit Score: This is the foremost aspect to consider. Your credit score indicates your creditworthiness. So, always maintain a good credit score by repaying your existing loans and credit bills timely. A credit score above 750 is always considered good. The higher the credit score, the greater are the chances of getting a personal loan approved at the lowest rate of interest.
- Income: Having a good income assures a lender whether you are capable of repaying your loan on time or not. Therefore, make sure you have a stable income before proceeding with your loan application.
- Employment: People with a good job profile and consistent income let you enjoy low interest on personal loans.
- Stop Applying With Multiple Lenders: Do not apply for a loan with multiple lenders as each loan inquiry reflects in your credit report while affecting your credit score. And because of this, you may not receive a good deal on your personal loan.
- Maintain Good Relationship: Maintaining a good relationship with your existing lender may help you to get a lower interest rate in your future loan application.
Top 10 Bank Loans With Interest Rates – 2022
|Bank Name||Interest Rate|
|State Bank of India||9.60% Onwards|
|Central Bank of India||8.45% Onwards|
|Union Bank of India||8.90% Onwards|
|Punjab National Bank||8.95% Onwards|
|Indian Bank||9.05% Onwards|
|Bank of India||9.35% Onwards|
|IDBI Bank||9.50% Onwards|
|Bank of Maharashtra||9.55% Onwards|
|UCO Bank||8.45% Onwards|
|HSBC Bank||9.75% Onwards|
Follow the below points to get a low-interest rate on the personal loan,
- Maintain a high credit score to enable a low-interest personal loan. Don’t miss your repayments, pay them on time to increase the chances of low-interest personal loan approval.
- Before proceeding with your loan application, make sure you compare loan interest rates offered by different lenders. This simple practice will help you to get a low interest on your personal loan.
- Check with the existing lenders, might be a good relationship with them can help you enjoy a low-interest personal loan.
- Most lenders often offer attractive deals and offer for their valuable borrowers. So keep an eye on those deals to avail low-interest rates.
On a note, interest rates on personal loans may vary among the lenders, so keep an eye on the offers, do a comparative analysis before processing the application, maintain a good credit score, and avail a low-interest loan to meet all the financial needs with ease and convenience!