Applying for a personal loan has been made quick and easy by introducing the online application and account management feature. In addition, the application and documentation process has been improvised in order to make the facility more accessible. However, the interest rate calculation remains the same and hence, the same research and planning have to be done in order to ensure an affordable interest rate. On that note, here are a few factors affecting the personal loan interest rate you must know. Once you know them, you can work on it and improve your loan eligibility to get the same at a lower interest rate.
Your income: Your income decides your repayment capacity. Thus, higher income is synonymous to higher repayment capacity and vice versa. Accordingly, your income is an essential factor which needs to be on the higher side. The least to say, your income should be enough to get you the desired amount of loan.
Your employer’s reputation: Again, who do you work for has a higher impact on your loan application process than what your loan eligibility is. For instance, a person working with a multinational company such as Bajaj Finserv would be more credible compared to someone working for an not-so-popular startup.
Your relationship with the lender: Lastly, your relationship with the lender can affect the interest rate. For instance, lenders usually offer lowest possible interest rates to customers who have a good reputation with them.
Bottom line: Don’t forget to check the personal loan eligibility criteria before applying for the loan.