Financial Blog

Factors that can affect your personal loan interest rate.

posted on 2019-08-26 12:45:24 by Admin

A personal loan is one of the easiest loan & famous loan to opt for. Being popularly known as an unsecured loan, its flexibility to use, low-interest rates & instant disbursal process makes it everyone’s first choice to get. Like every other loan, the interest rate of personal loans can make you think about to apply for it or not. There are so many main factors that can affect the interest rates of personal loans. Currently, the interest rates provided by banks & non-banking financial services range from 11% to 24%.

Here are seven factors that affect the interest rates of personal loan for your request.

1. Income/salary level of applicant

The high income or income source of an individual reflects its credibility for the repayment of the loan amount. It is the major factor where you can negotiate with the bank against your high income. Also, sometimes, many banks or non-banking financial companies give a personal loan to selected customers by reviewing their salary level.

2. Your CIBIL Rating

The CIBIL or credit score is an equally important factor as the salary of an individual. Most of the banks & non-banking financial companies prefer to give loan to those whose credit score is higher than 700. Higher credit score means there is a high possibility of getting a loan easily. CIBIL score or credit score is a universal method followed by most of the financial companies to check the past t2ransaction & re-payment history of the customer.

3. Your company status

A well-reputed company gives banks more assurance that your job or career is stable & you are getting a salary on time. Banks give a personal loan to those individuals whole company remains/are registered/listed with them.

4. Credit & payment history

In case if you have applied for a personal loan then while processing your loan request from bank‘s end, there is a high chance or mandatory thing to them that they will check your past credit & payment history.They can check your default or delay in re-payment history. Always try to pay your credit card bills or bank’s EMI on time to increase your possibility of getting loan easily in future.

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5. Relationship with your bank

If you have a saving account or salary account in a bank and you are applying for a personal loan from the same bank then there is a high chance that they will offer you the best interest rates against your loan. This relationship can help you in getting a personal loan easily from your bank.

6. Individual negotiable skills

Yes, individual negotiable skills can also affect the interest rates for the personal loan. While talking to the bank’s representative you can also ask him for better interest rates against your loan request. You can convince them that you can re-pay the loan amount easily because you have a good stable job /business.

Summary:

Although getting a personal loan is not a tough task to the individual, these days many banks & NBFCs are offering personal loans on interesting interest rates. The main factors which are highly responsible for once loan approval are his salary & credit score/history.

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