- Due to its intriguing feature set and the ongoing rise in personal spending, personal loans have been a more popular credit alternative over the past several years. Another key factor driving the increase in Personal Loan borrowers is that different lenders on the market currently provide the lowest interest rates on these loans. The current personal loan interest rate ranges from 9.99% to 24% p.a.
While availing of a Personal Loan, you must always check for the Personal Loan minimum interest rate as it directly impacts your finances.
While applying for a Personal Loan, you must keep an eye on three major factors which include the rate of interest, loan amount, and tenure. To avoid any delay or default in repayment, you must always use a Personal Loan EMI calculator to plan your monthly EMIs in advance. Using a Personal Loan EMI calculator will also help you in availing of the lowest Personal Loan interest rate. A Personal Loan can be used for weddings, education, renovation, travel, etc. You must keep the below points in mind to get a good interest rate on a Personal Loan:
Lender
There are various lenders in the market and choosing the right one can be difficult for you. As a borrower, you must compare all the lenders in the market to avail of the lowest Personal Loan interest rate. Before applying for a Personal Loan, you must always visit the lender’s official website and check all the current offers to avail of a Personal Loan at a minimum interest rate.
Credit Score
A Credit score is one of the major factors that influence your rate of interest while availing of a Personal Loan. You should always maintain a higher credit score to get a loan at the lowest Personal Loan interest rate. A credit score of 750 or higher is considered good for borrowing a Personal Loan. A lower credit score could make it difficult for a borrower to avail of a loan at a lower interest rate. A credit score is one of the primary eligibility criteria for a Personal Loan. Alongside this, you need to fulfill eligibility criteria such as age, income, and work experience.
Credit Report Information
Credit report information is provided by credit agencies such as TransUnion, CIBIL, Equifax, Experian, and CRIF Highmark. These agencies are responsible for providing credit information to borrowers. Your credit report information consists of credit inquiries, credit scores, missed payments, credit card balances, etc. It helps lenders to understand your entire credit history and check your creditworthiness. To get a lower interest rate, you must have a good credit report.
Loan Amount
The loan amount is the amount borrowed by a borrower for pre-decided tenure and rate of interest. A higher loan amount means higher risk for a lender. For a higher loan amount, a lender might charge a higher rate of interest. You must always avail loan amount as per your requirement as it can lead to default payment. Using an EMI calculator always helps you in planning your Personal Loan in advance.
Repayment Tenure
As a smart borrower, you must check all the factors such as loan amount, rate of interest, and tenure at your convenience. For a longer repayment tenure, a lender will levy a higher rate of interest. You must choose repayment tenure depending on your loan requirement.
Debt to Income Ratio
The debt-to-income ratio shows the ratio between the money you owe and to money you earn. If you have a higher debt-to-income ratio, a lender will charge a higher rate of interest. The debt-to-income ratio tells whether a borrower is capable of availing of a new loan and whether he/she will be able to repay the loan on time. Hence, it is important to maintain a lower debt-to-income ratio.
Collateral
There are two types of Personal Loan – secured and unsecured Personal Loans. When a lender offers a secured Personal Loan, a borrower has to pledge personal assets as security such as a savings account, certificate of deposit, or any other asset. In the case of a secured loan, the upper loan limit is slightly higher as compared to an unsecured Personal Loan. Generally, Personal Loans are unsecured loans where you do not have to pledge assets as collateral security.
FAQs
What is the average interest rate on a personal loan?
The interest rate on a Personal Loan varies slightly based on the borrower’s profile – credit score, income, age, past payment history, etc. However, the rate starts from as low as 9.99%* p.a.
Is 10 percent interest high for a personal loan?
A 10% interest rate is considered as a good starting range for a Personal Loan.
How much can you borrow with a personal loan?
Credit success extends Personal Loan up to a maximum of Rs. 30 Lakh.
Who is eligible for a personal loan?
A borrower is eligible for a Personal Loan if he/she satisfies the below-mentioned conditions. These eligibility criteria may differ slightly from lender to lender.
- Age: You must be between 24 and 58 years of age
- Employment: You should be in current employment for a minimum of 6 months, and you should have a minimum of 24 months of total work experience.
- Monthly income: Your monthly net take-home salary should be a minimum of Rs. 30,000.
- Credit score: You should have a credit score of 750 or more.
Which bank is offering the best interest rate on a personal loan?
There are various banks that offer a Personal Loan at the best interest rate. Prior to applying for a Personal Loan, you need to match the eligibility criteria such as age, employment, monthly income, and credit score set by the banks.
