When you need money urgently, and do not have access to ready cash, a timely sum of money lent to you by a financial institution can seem like manna from heaven! In other words, taking a loan to fulfil a wish or to handle an emergency cash crunch is no longer frowned upon by the generation that lives on credit today. With the advent of e-commerce, youngsters today seldom think twice before opting for short term loans and paying easy monthly instalments for just about everything.
While opting for a loan has become easy with so many lending institutions offering a whole array of products, not everyone knows how to get the best personal loan interest rates and whether indeed the product he is choosing is the best fit to his financial profile. Here is a ready reckoner of the things you need to do in order to be in a position where you can get the best rate of interest when you are opting for a personal loan.
Compare the various products available
There are a plethora of personal loan products available today. However, the first thing you need to do when opting for a such a loan is to decide on the exact amount of sum you need to borrow and what are the loan options for the same. Aggregator websites have made this job easier for any prospective borrower. You can go on any of these websites and use a loan calculator to get the details of the type of loan you wish to apply for. When you have an amount in mind you can figure out the tenure of repayment and the interest rates on various products. This will help you make an informed choice.
Check your credit score
You credit score is a measure of your financial health and is widely referred to by any lender while assessing your creditworthiness. Therefore before you apply for a personal loan or any other line of credit for that matter see that your CIBIL rating is satisfactory. A score of 750 and above (out of 900) is considered good. If there is any scope for you to improve your score before you make an application for a loan, do so without any delay. A better credit score enhances of chances of availing of a personal loan at a better rate of interest.
Do not apply at multiple places
Sometimes, when a borrower is in a hurry to access a short term loan, he makes the mistake of applying for too many similar products at the same time in the hope of getting the best one at the earliest. This can prove to be a costly mistake, as each lender you make an application to checks your CIBIL report to assess your creditworthiness. These requests by lenders to access your credit are recorded as hard inquiries on your report and brings down your CIBIL rating by a little each time. You could consider making a thorough comparison on an aggregator website instead or making a visit to a bank branch instead of making an online application just to know the details on interest rates.
Look for the best available option
The competition in unsecured loans has thoroughly intensified among lenders. As a result there are many loan products that are available for you to access today. The bigger and more established lenders go all out on advertising their bouquet of products and try to convince you that their offering is the best. However, do not get carried away with flashy advertising or tall claims. Conduct your research yourself before you make a final decision. In fact, it may be a good idea to look beyond traditional lenders when you are seeking an easy personal loan.
You may consider an online marketplace for loans known as a peer to peer lending platform where short term loans are provided by individual lenders. Since there is no intermediary involved in such platforms you can directly approach a lender with your needs. If he deems you fit as a borrower, you can decide on the terms and conditions of the repayment and get immediate access to such funds. Personal loan interest rates may turn out to be much cheaper than the rates offered to you by traditional lenders.
Anything that is beyond your ability to repay should be strictly avoided as you may be stepping into a potential debt trap.
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