Factors that Can Affect the Personal Loan Interest Rates
There are numerous financing services available in India. They have been designed in such a way that every borrower has the ideal type of option according to his needs. However, the most frequently used finance generating alternative within the country is a personal loan.
This service has become so popular that it is the first choice of many borrowers. It is evident when it comes to generating quick funds. Furthermore, personal loan interest rates make it easy for potential borrowers to use this particular service.
If you are still unaware of what a personal loan is, then our article will help increase your knowledge. Here you will also read about the factors that can affect personal loan interest rates as well.
What is a Personal Loan?
It is a type of financing option created for borrowers who are looking to acquire funds immediately. Moreover, a personal loan has been designed especially to be used for short-term requirements. This means the tenor of a personal loan is not as elaborate as some other financing alternatives.
However, the personal loan eligibility criteria are quite simple. The same can be check with the help of a personal loan eligibility calculator. They can be found online on numerous financing firm websites. Also, personal loan interest rates are comparatively high, which should always be remembered.
What can affect a personal loan interest rate?
1. Your CIBIL score
A CIBIL score is a credit rating, which is generated for each borrower and depends on his history. The report can include everything, from the number of loans that you have taken to your repayment capacity and beyond. In case your CIBIL rating is low, then it can affect your personal loan interest rate drastically. You have to build your CIBIL score before applying for personal loan to get best deals on interest rates. In most cases, borrowers who have low CIBIL score need to pay a high interest rate.
2. Your company’s reputation
If you are an entrepreneur, then your company's reputation can also affect personal loan interest rates. For example, if you have taken a business loan which was not paid on time. Then the same would be reflected in your credit report. This will be highlighted when the lenders conducts a background check for your personal loan application.
3. Your income
Another factor that can cause your personal loan interest rate to rise is your income source. If you do not have a regular income source, then financing firms will calculate your repayment capacity differently. Moreover, your income and expense ratio also plays a major role in deciding the interest rate for your personal loan. Hence, always ensure that you have a steady income proof before applying for such a service.
4. Relationship with the bank
Lastly your relationship with the bank can give you a better personal loan interest rate as well. If you have been a customer of the bank for many years, then you can receive better interest rates. This is because they are aware of your regular income and assets. However, it completely depends on the banks or other lending institutes.
NBFCs offers you pre-approved online deals for multiple financing services including personal loans. Such offers can help a borrower make the loan acquiring process less time-consuming. If you want to unlock your pre-approved personal loan offers without any hassle, then you can submit your basic personal information today.
About This Author
Anamika Verma A financial Advisor Joined: December 18th, 2017
