One of the most common forms of borrowing, a personal loan can help meet your immediate need of funds. Whether you need to make a payment to the contractor for home renovation or to have to plan a wedding, you can apply for a personal loan. It comes at a low interest rate and requires no collateral. There are many reasons why a personal loan is the first choice of borrowers and if you want to apply for a loan, do not forget to compare the personal loan rate of interest before you proceed.
The impact of interest rate
As you are aware, the rate of interest is a part of the loan and it will have an impact on the total cost of borrowing. Hence, if you do not pay attention to the interest rate, it could disrupt your finances. No matter the type of loan you apply for, the interest rate will have an impact on the total cost. All borrowers seek low interest rate on the loan and for that, you need to compare the terms of the loan with different lenders. The rate of interest will be based on the market rates but can vary from one lender to another. Do not rush this process.
When the interest rate is high, your EMI amount will be high and the monthly outflow will also be high. In contrast, if the interest rate is low, the EMI will be low and easily manageable. You can get complete details about the interest rate on the website of the lender. Scout the market for a few lenders and make a note of the interest rate offered by them.
How to get the lowest interest rate?
The purpose of all borrowers is to get the lowest rate of interest on the loan. There is a way you can do so. Simply use the EMI calculator and you will get an idea about the impact of interest rate on the monthly outflows. The calculator is available on the website of the lender and it is free to use. You simply need to provide the loan amount and tenure. When you click on Estimate, you will see the EMI amount you will have to pay on the loan. Now, when you change the loan amount, you will see a different EMI. Based on this, you can make a decision whether you will be able to make the repayment on time or not.
Ask for offers and discounts
Many lenders in the industry offer special rates to existing customers. Further, if you have a solid credit score and a strong repayment history, you will enjoy a special discount on the interest rate. Applicants with a poor credit score often have to pay a high interest rate because the risk of default is high and the lender will not be willing to take the risk. Hence, a high credit score can lead to lower interest rate. Always ask for offers or current discounts before you apply for the loan.
The personal loan application procedure is simple and hassle free. You can apply for the loan if you have a regular source of income. You will have to show the lender that you have the income flow and an ability to make the repayment on time. After you have compared the personal loan rate of interest, choose a lender and make an online loan application. You only need to fill the application form and submit the documents of identity proof, address proof and income proof. The lender will verify the documents and approve the loan without any delay.
Remember, a longer tenure means a lower EMI and a short tenure means high EMI. When the tenure is short, you need to repay the loan within that time and the EMI amount will be high. It also means you will end up paying a smaller amount in the form of interest. However, do not agree for a short tenure and high EMI only to repay the loan in time. Consider your repayment capacity and read the fine print thoroughly. Always sign on the loan documents only after you are aware of the terms and features of the loan.