Getting a personal loan with a low interest rate can save you a lot of money over time. Interest is the extra amount you pay along with the loan amount, so the lower the rate, the better for your budget. To get a low interest personal loan, you must meet certain criteria such as a good credit score, stable income, and a strong repayment history. This article will help you understand easy steps to get a personal loan at a lower interest rate.
1. Maintain a High Credit Score
Your credit score plays a big role in deciding the interest rate on your personal loan. Lenders usually offer low interest personal loans to people with credit scores above 750.
How to improve your credit score:
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Pay your EMIs and credit card bills on time
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Don’t use your credit limit fully (keep it below 30%)
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Avoid applying for too many loans or credit cards at once
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2. Compare Different Lenders
Every bank and NBFC offers different interest rates. Before applying, compare offers from multiple lenders like:
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Public and private sector banks
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NBFCs (Non-Banking Financial Companies)
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Online loan apps
Use loan comparison websites to check who is offering the lowest interest rate based on your profile.
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3. Choose the Right Loan Amount and Tenure
Asking for a higher loan amount or a longer repayment period may increase your interest rate. Instead, borrow only what you need and select a shorter loan term if you can manage the EMIs.
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4. Show a Stable Income Source
Lenders trust borrowers who have a stable and regular income. If you’re a salaried individual, submit your latest salary slips and bank statements. If you’re self-employed, share your income tax returns and business statements.
A higher and stable income means better chances of getting a low interest rate.
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5. Apply with a Trusted Bank or Existing Relationship
If you already have a salary account or savings account in a bank, apply for a personal loan from that bank. Long-term customers are often offered preferential interest rates.
Some banks also offer low rates to employees of government or reputed private companies.
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6. Keep Your Documents Ready and Accurate
Make sure your documents are correct and complete. This includes:
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Aadhaar card / PAN card
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Income proof
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Address proof
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Bank statements
Quick and accurate verification helps in faster approval and sometimes better interest deals.