An unsecured loan is easy to apply nowadays and is one of the best sources to meet the financial emergency with ease. But, before you apply for a personal loan, you try your best and look for such loans that are offered at a low rate of interest. Below given are some of the best techniques which will help you to procure personal loans at a competitive rate of interest.
Keep your credit score in good shape
Credit score and credit history are the main factors that help the financial institutions to determine the rate of interest on your personal loan. Maintaining a high credit score and a positive credit history is the key to get a low-interest rate on a personal loan. If your credit score is keeping you from securing the best personal loan interest rates, it is time you started working on it. Here are a few things you can do to improve your credit score:
- Pay your outstanding bills on time
- Keep your credit utilization ratio under 30%
- Apply for a loan only when required
- Do not close your old credit card accounts
- Check your credit report and score periodically
- Dispute any inaccuracies in your credit report
Choose a short loan tenure
The faster you repay your loan, the lower will be the risk you pose to the lender. You will find most lenders offering better interest rates on mini personal loans with shorter tenures. If possible, try to choose a short-term personal loan to get a competitive interest rate.
Add a co-applicant
If you want to apply for a loan and you do not have an optimum credit score or you have just started building your credit history, in such a case, you can add a co-applicant on your loan who has a good credit score. Adding a co-applicant will not only help you to procure the loan at a competitive interest rate but it will also increase your chances of loan approval.
Choose the right lender
Choosing the right lender is the most important thing when you plan to avail of a loan. To find the right lender for yourself, conduct thorough research on different loan providers and the kind of loans you can avail. The interest rate will depend on the tenure and amount of the loan, apart from a lender’s policies and evaluation criteria.
These tips will surely help you to avail of a low-income personal loan at the lower interest rate and hence can reduce your debt burden.
