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How To Get The Best Interest Rates On Personal Loans

BankBazaar | 16 May, 2016  | Follow Author | Add to my Favourites 
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Personal Loans are the instant noodles of the finance world. They are one of the fastest disbursed loans and require minimum documentation. Hence, they are the go-to loans in almost all emergencies. If you are looking for a Personal Loan, we suggest that you compare offers from multiple banks before applying for one. This will aid you in getting a Personal Loan at competitive rates.

Let us tell you a secret about Personal Loan interest rates. While the rate of interest on Personal Loans broadly falls within the same range for all banks, a discount or a premium can be applied on a person-to-person basis depending on the individual’s profile. Here’s how you can get a favourable rate of interest on your Personal Loan.

1- Don’t bite off more than your can chew

Don’t bite off more than you can chew. What we mean is, don’t apply for an amount that is more than what is available for your salary bracket. Don’t confuse the ease of getting a Personal Loan with getting a free rein on the loan amount. This puts your loan application at the risk of being rejected. Ask for an amount which will fit comfortably with your salary and won’t make the banks think twice about it. If you are not sure of the maximum loan amount you can apply for, ask the bank. It’s better to be safe than sorry.

2- Your Credit History Is Your Report Card

Your credit history is your financial report card. It tells lending institutions about you money-management skills. If you have been good at repaying your debt in the past, your report card will reflect a good grade. A CIBIL score of 750 and above is good and will make lending institutions give you a Personal Loan readily. Keep in mind, when you apply for a Personal Loan, banks will scrutinize your CIBIL records to assess your credit worthiness.

If your Credit Score makes you sigh, take the following steps to fix it:

-  Find out what hurt your Credit Score – a late EMI payment or a build-up of Credit Card bills? Take responsibility for your debts and make sure you start making payments on time. A few timely payments will give your Credit Score that much needed boost.

-  Having your Loan or a Credit Card application rejected due to a bad CIBIL Score is like rubbing salt in a wound. If your applications are being rejected, we suggest you stop applying and focus on improving your Credit Score. Once your score is in the required range, you can apply for a loan.

-  Watching movies back-to-back is fun. But applying the same rule to loans is bad for your Credit Score. Don’t apply for a fresh loan immediately after closing one. This indicates that you are not good at maintaining liquidity.

-  The maximum limit on your Credit Card might be as big as the Grand Canyon, but don’t exhaust all of it. Maxing out your Credit Card limit or using too little of it hurts your Credit Score. Maintain a healthy ratio of Credit Card usage.

3- Relationships Matter

Sometimes, the thing you are searching for everywhere is right under your nose. This is true of Personal Loan interest rates as well. You are likely to get a discount on your Personal Loan interest rate if you hold an account with a bank of your choice. One reason being, they would like to retain you as a customer for all their offerings. Second, being your bank they are aware of your credit behaviour. If you are in their category of good and responsible customers, they might reward you with an attractive interest rate on a Personal Loan. In addition to being an account holder, having a good interpersonal relationship with your bank officials could help you bag a good rate of interest. The next time you visit your bank, smile and say, Hi!

4- Know Your Brand Value

Just the way you would value Louis Vuitton over a local brand, banks extend a warm welcome to those customers who work for big banner companies. Working for a company of repute speaks volumes about you income and job stability. Sometimes, banks offer Personal Loans at discounted rates of interest to employees of some well-known companies. If you are applying for a Personal Loan, ask the bank about their corporate tie-ups. Your company might have made it to the list. Talking about the company, your designation and income play big roles in helping the banks determine an interest rate for you. The better your designation and higher your income, the lower is the interest rate. A fat pay cheque assures the bank that you are less likely to default on your payments.

Now you know about the 4 important tricks to get a good rate on a Personal Loan.

About BankBazaar

BankBazaar is the world's first neutral online marketplace that gives you instant customized rate quotes on loans and insurance products. You can instantly search for, compare and apply for loans, credit cards and insurance products on our site. Since we partner with India's leading financial institutions and insurance firms, you have to look in only one place to get a great deal:


For more information please write in to [email protected]


Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.

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