A personal loan can finance big expenses like those for education, wedding, home refurbishments, and also various emergencies. To optimise your user experience, look for various benefits offered by lenders like a flexible repayment tenure, and online applications and quick disbursals of loans. Balance transfers of existing personal loans and credit cards at pocket-friendly rates can be a bonus benefit!

Besides, try to get a personal loan at a low interest rate to pay it off conveniently. Here are 5 tips for that.

5 Ways to Get Better Interest Rate on a Personal Loan

#1 – Boost Your Credit Score

A high credit score (above 700) can help you get a personal loan at a low interest rate. Such a score is backed by good credit history. So the lender can trust that you can repay the loan in time.

Try to improve your credit score and history by:

  • Making timely credit card bill payments in full
  • Repaying loans before or on time

#2 – Build and Maintain a Good Loan Repayment History

The lender checks not only your CIBIL score but also your loan repayment history before deciding an interest rate for a personal loan.

Banks generally lend to people who have not defaulted in the last 12 months. Even if a new loan is granted to a loan defaulter, the interest rate may be hefty.

So, establish and maintain a high discipline in loan repayments to increase your eligibility for a low interest rate on a personal loan.

#3 – Use Your Professional Credentials

You can make the most of the following professional credentials to qualify for a personal loan at a competitive interest rate:

  • Income: The higher your income, the more easily you can make regular loan payments. So, the chances of having a loan approved at better interest rates increase. For that, produce valid income proofs like income tax returns.
  • Organisation’s reputation: The lending bank also checks the reputation of the company where you work. If you’re employed in a renowned organisation, the lender deduces that you have a stable career and can repay the loan in time. So, you may be assigned a low interest rate on the personal loan.

#4 – Make Use of a Good Banking Relationship

Prove yourself a loyal customer of your bank with a good history of opening and managing your fixed deposits and savings accounts. A good relationship with your bank can improve your eligibility for a personal loan at attractive interest rates.

#5 – Compare Interest Rates at Various Lenders

If you cannot get a good interest rate on a loan from your bank:

  • Compare the interest rates offered by different lending banks.
  • Choose the bank offering the lowest personal loan interest rate.
  • If the bank allows a paperless, digital application, apply for the loan online and enjoy instant disbursal!

Remember to calculate the monthly EMIs based on your chosen loan amount, interest rate, and repayment tenure using the personal loan calculator on the bank’s website. Then ensure to pay the EMIs regularly within the specific tenure.


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October 2021