The personal loan interest rate is fixed for every borrower. But depending on the eligibility criteria, this rate can vary from time to time. There are a few factors that affect the interest rate of an individual.

1. Income

A person with a high disposable income can have a greater repayment capacity. Therefore, one with a higher income would get a lower rate of interest. Also, it is one of the common practices in any lending sector that people who have a stable and high disposable income would get lower Personal Loan Rates.

2. Employer's status

If the borrower is from many well-known and reputed organizations, they would be responsible enough to make timely payments. It would help them to have a lower rate of interest.

3. Credit score

It is one of the important aspects that affect the interest rate of any personal loan. A high credit score of 750 and above would help any borrower get a lower interest rate.

4. Relationship with the lender

A good relationship with the lender can help you have some leniency while the lender charges the interest rate. Make sure that you have a long and loyal relationship with the lender of the financial institution to get a favourable rate of interest.

5. Debt to income ratio

A low debt to income ratio would be ideal for anyone to get a lower personal loan interest rate. If the ratio is high, it can be a burden for the borrower.

6. Default history

A borrower with no default history would receive a lower rate of interest.

One must consider all these aspects before getting any loan amount. These can somehow affect the interest rate of a personal loan. However, most of the lenders in India prefer to have a borrower with 0 default over the past 12 months.

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