A personal loan is one of the best ways to raise quick funds, especially in case of unexpected emergencies. It is a multipurpose loan of an unsecured nature that can be availed by anyone for almost any purpose. You can research many lenders and compare their interest rates online to find the best deal.
Fullerton India Personal Loan Interest rates can vary due to many reasons. But you can scale up your chances of landing a lower interest rate by having the right knowledge. This article will cover the top five factors influencing the individual loan interest rates in India, and hopefully will be able to help you choose the best deal available according to your requirements.
Top 5 Personal Loan Interest Rate Parameters:
- Creditworthiness:The first thing your lender verifies while processing the loan is your creditworthiness. Your credit profile tells a lot about your financial behaviour and reliability. Applicants with an excellent record of paying EMIs on time, never defaulting on payments and having a debt to income ratio of less than 30% are considered to be good candidates and may qualify for lower interest rates.
- Monthly income:Your income plays a crucial role in a personal loan application. Lenders tend to offer lower interest rates to individuals having a stable income or those that work with trusted employers, or have a stable self-employed business. Self-employed individuals are required to submit bank statements ensuring that they have sufficient cash flow. You can also show any alternate income like rent from a property, fixed deposit returns, and investments to get a better deal.
The CIBIL score is one of the most influencing factors deciding the personal loan interest rates in India. Having a good CIBIL score indicates that you make repayments on time, and do not default on EMIs. Many lenders require a score of 750 or more to process the personal loan application at lower interest rates. Having a score of less than 700 can make interest rates skyrocket, it is advisable to repay some EMIs and wait until your rating improves.
- Loan tenure:Longer tenure decreases your monthly liabilities, making it easier for you to repay timely. However, a longer term will usually cost more because the overall interest payable will be more. You can use the Fullerton India personal loan calculator online to plan your monthly EMIs as per your monthly budget. It will help you select a tenure that will be convenient in terms of managing your EMI payments within your budget.
- Debt to income ratio:
Piling up debt can take a hit on your personal loan interest rates. Make sure to repay some of your existing debt before applying for a new loan so that you have a decent debt to income ratio. Lenders prefer applicants with a debt to income ratio of less than 30% to 40%, or else they will consider lending you a loan as a risky investment. You can check a personal loan calculator to understand your liabilities and plan your application accordingly.
Opting for a personal loan is the most reliable way to resolve any urgent credit requirements.
It is advisable to check your personal loan eligibility from your lender’s website. It will help you apply for a loan that will be processed with lesser chances of rejection.