Whenever we are in need of some urgent cash we tend to look towards obtaining a personal loan from banks. Personal loans are, usually, the best option as they are the cheapest as compared to other unsecured debts such as credit cards which charge an interest rate much higher than personal loans. Also, personal loans are easily available and don’t involve much processing. Moreover, you don’t need to provide any of your assets as collateral when applying for personal loan. However, for getting the best personal loan rates you should go along the following tips.
Analyze & Compare
Various sources of personal loans are available at your disposal and you mustn’t stick to only a single source as the other might be providing a rate better than the first one. Hence, a comparative analysis will help you find a lender who is giving best rates and you will be able to save on your expenses. Many websites, like MoneyLend, are available which help you to generate a comparative analysis report. You can get a report of and select the offer which suits you best. However, you must not select an offer only on the basis of interest rates. A lot many other factors are there like processing charges, documents required, pre-closure options etc.
Decent Credit Score
If you have a good credit score, it automatically translates into more personal loan options at a competitive interest rate. Hence, you must maintain a decent credit score. For that, you should maintain bill payments, other loan payments, credit card payments properly and mustn’t default on any. Moreover, if you don’t have any running loans on your head, you would be in a much better position to get a good deal on . Hence, it is advisable to check on your credit score on a periodic basis to know your current financial standing.
Go for Shorter Personal Loan Term
More the number of years you will choose to repay the loan back to the lender more will be the interest rate as the risk, for the lender, increases with increase in tenure. However, if you choose a shorter personal loan term, it will take less time for the lender to get his/her money back. Hence, the best rates for personal loans are reserved by the lenders for shorter loan terms. So, it is ideal that you select a short tenure. Selecting a long tenure might be tempting as you need to pay pretty less EMI but the loan will be on your head for a longer duration. Selecting a shorter tenure enables you to get rid of the obligation quickly.
Go for Variable Rates
The interest rates for personal loans can be either fixed or variable. Fixed interest rates, generally, start at the higher end and continue the same for the total tenure of the personal loan. However, variable interest rates start lower, but adjust with the ongoing interest rates and may increase gradually as the month's pass. A personal loan with a fixed interest rate is ideal if you have to select long tenure. However, if you are going ahead with a short tenure on your personal loan, you must go with a personal loan offer which provides you with variable interest rates as you will be likely to pay off your loan before the interest rates get a chance to go really high.
Get a Cosigner for your Personal Loan Application
If you have a poor credit score banks might not approve your application for a personal loan at all or provide the same with extremely high-interest rates. In these cases, it is always better that you add a cosigner to your personal loan application that has a decent credit score. When you add a cosigner bank will not only consider your credit score but take into account the of the cosigner as well. However, you still may get a personal loan at an interest rate on the higher end but it will always be at the lower end of what you will be getting when applying on an individual basis. However, it is not easy to get a person to cosign your application for you as the cosigner will also be putting his/her credit history at risk if you are not able to repay the loan without making any defaults or late payments.
Take into Account the Option of a Secured Personal Loan
A personal loan is, usually, unsecured i.e. it doesn’t require you to put forward any of your assets as collateral. On the other hand, if you go with a secured personal loan you need to put forward any one of your assets as collateral. In the case of a secured personal loan, the asset of the borrower acts as a security for the lender and provides a guarantee for the loan. Hence, lenders are most likely to approve a secured personal loan even if you have a bad credit score. Also, another benefit of opting for a secured personal loan is that you will get the required loan amount at much lower interest rates as compared to unsecured personal loans. However, you need to be very particular in making the repayments, according to the signed accord; otherwise, you might have to lose your asset.
Keep A Check on Offers
Many lenders provide attractive offers on personal loans during the festive seasons. You can make use of these offers to grab a decent deal on personal loans. You might end up saving a lot on your expenses as compared to applying for a personal loan with the same lender in normal days. So, make the most of festive seasons.
Whenever you are applying for a personal loan it is always advisable to come to a decision slowly by taking into account all the options that you have at your disposal and analyze each factor to make the best choice.