5 Tips to Get the Best Deal on Your Personal Loan

Selecting the best Personal Loan option with affordable rates, nominal charges, and favourable terms helps you rein in the borrowing costs and repay your EMIs with ease. Here are 5 points that can help you get a Personal Loan with manageable EMIs and lower interest costs:

How to Get the Best Deal on a Personal Loan

1. Maintain a Good Credit Score

Banks and non-banking financial companies (NBFCs) consider your credit score to determine your creditworthiness. Having a credit score of 750 and above increases your chances of getting quick Personal Loan approval at lower interest rates and better terms. This, in turn, can help reduce your overall borrowing costs. You should check your CIBIL score before applying for a Personal Loan, as lenders may reject your loan application if you have a lower credit score.

If you have a lower credit score, you can give it a boost by following certain healthy credit practices. These include repaying your EMIs and credit card dues on time, not applying for multiple loans within short durations, frequently checking your credit report for inaccuracies, etc.

2. Compare the Personal Loan Interest Rates and Charges

Before you decide to apply for a Personal Loan, check and compare the interest rates, processing fees, prepayment charges, etc., of multiple lenders. Lower interest rates can significantly reduce your overall cost of borrowing and monthly payments for the loan.

Higher fees and charges can inflate your borrowing costs even if the interest rates are low. Additionally, some lenders may not disclose all the fees and charges on their Personal Loans during the discussion stage. Read the loan documents carefully to avoid future surprises. Any additional charge levied by the lender, apart from the ones mentioned in the loan document, may increase your overall borrowing costs.

3. Check for Pre-approved Loan Offers

If you have any existing relationship with a lender in the form of a deposit account, credit card or loan, you can check with them for any Pre-approved offers on Personal Loan. Many lenders offer Pre-approved personal loans with lower interest rates, minimal paperwork, quick disbursal, etc., to their existing customers based on credit profiles.

4. Be Mindful of Loan Tenure

While you may opt for a longer tenure to reduce your EMIs, it may increase your total interest costs. On the other hand, choosing a shorter tenure may increase your EMIs, but it will keep your overall borrowing costs in check. You should opt for a repayment period that balances between paying affordable EMIs and ensuring that the total interest outgo doesn’t exceed your budget.

5. Borrow Only What You Need

Even if you are eligible to get a higher amount while applying for a Personal Loan, opt only for what you can repay back comfortably. Opting for a higher loan amount increases your repayment burden in the long run and may also lead to loan default.

6. Negotiate With the Lender

Once you have checked the Personal Loan offers and received quotes from multiple lenders, negotiate with them for lower interest rates and favourable terms. Many lenders may be willing to offer a Personal Loan at lower interest rates depending on your credit profile and based on whether you have received competing offers from other lenders. If you can successfully negotiate with a lender to offer you lower interest rates, it can help save on your borrowing costs.

7. Apply for the Loan with a Co-applicant

If you do not have a high credit score, you can apply for a Personal Loan with a co-applicant with a good credit profile to improve your chances of securing favourable interest rates and better terms.

To Conclude

Choosing the right Personal Loan with affordable EMIs helps you minimise your financial burden and manage interest payments with ease. Ensure that you build your credit score, compare loan offers of multiple lenders, borrow only what you need, check for pre-approved offers, apply with a co-applicant, etc., to get a Personal Loan at affordable interest rates and avoid the risk of loan default.

Disclaimer: No Deccan Chronicle journalist was involved in the creation of this content. The group also takes no responsibility for this content.