Planning to take out a personal loan? Ever wondered how much it actually costs? Personal loans are undoubtedly the most preferred loan type by those who need funds on an urgent basis, considering their flexibility of use and quick application approvals. But when you get personal loans online instantly, you must understand that they must be repaid with an added interest determined by lenders.
In this blog, we’ll learn more about personal loan interest rates, the factors affecting them, and tips for getting the best rates.
Understanding Personal Loan Interest Rates
Personal loan interest rates are the percentage of the loan amount the lender or the financial institution charges the borrowers for taking the personal loans. They are the cost of borrowing the money and are typically calculated on an annual basis. The rate varies from lender to lender, can be negotiated and is of the following types:
- Fixed Rate of Interest: The amount added to the monthly payments remains constant throughout the tenure. This helps you make budgeting decisions while taking out the loan.
- Floating Rate of Interest: The rate keeps fluctuating according to market conditions. It can be an advantage only if it decreases, but floating rates don’t help if you want to make a fixed monthly budget for the expenses.
Factors Affecting Personal Loan Interest Rates
While you apply for an instant loan online, check out the factors that affect the interest rates:
- Credit Score: A good CIBIL score (potentially more than 750) helps you get loans at lower interest rates as it assures lenders about your creditworthiness and indicates your timely repayment of loans.
- Income: Borrowers with higher and steady incomes can ensure their ability to repay and get loans at lower interest rates.
- Loan Amount and Tenure: A larger loan amount increases the lenders’ risk, and they charge higher interest. On the other hand, longer repayment tenures include high interest rates.
- Debt-to-Income Ratio: The ratio of borrowers’ monthly debts paid with monthly gross income. A lower ratio indicates you have low debts and can negotiate for low interest rates.
- Relationship with Lenders: Borrowers who have long-standing relationships with lenders can ask for loans at lower interest.
- Lender’s Policies: Personal loan companies have different policies to assess the applicant’s creditworthiness.
Pro Tips to Get the Best Interest Rates on Loans
Follow the below-mentioned tips to get loans at a competitive rate of interest:
- Improve your credit score by paying off your previous debts to increase your chances of getting lower interest rates.
- Do your research and compare interest rates offered by different lenders to choose the one that best suits your budget.
- Avoid overborrowing, as it increases your loan repayment cost. Assess your needs and choose an amount that sufficiently covers your costs without becoming a financial burden.
- Choose a shorter tenure that is manageable in your budget and saves your interest.
Why Choose Stashfin for Your Personal Loans?
Stashfin is one of the most trusted financial services providers, offering numerous services, including instant loans online and insurance. Here’s why it is the most preferred choice of borrowers:
- Offers credit limit of up to ₹5,00,000 at competitive rates of interest.
- The application process is quick, 100% digital, and requires minimal documentation.
- Borrowers seeking to repay on an early basis can enjoy the flexibility of up to 30 days interest-free credit period.
- Choose the repayment tenure based on your situation.
- Get funds instantly after verification, accessible for those who need funds on an urgent basis.
Conclusion
To sum up, understanding the interest on personal loans is essential to making an informed decision. Improve your credit score, opt for a shorter tenure, and do your research to get personal loans online instantly at the best interest rates. Borrowers looking for a trusted platform can choose Stashfin to get quick loan approvals and a seamless experience.
