5 Tips To Get a Personal Loan at Low-Interest Rates

Nowadays, almost everyone is applying for a personal loan. It is the easiest way to get funds in case of an emergency. There are many schemes available with different interest rates. So, one should smartly choose the scheme with the lowest interest rate as that would be much more beneficial.

Here is a list of things that you must know before applying to get a personal loan-

• The average percentage of personal loan interest rates in 2020 -

The approximate average of the annual percentage rate of personal loans in 2020 is 9.41%. The interest rates depend on a lot of factors like the value of the loan, repayment time, and creditworthiness. Lenders advertise different rates between 6% and 36%. But these rates will only be available to you depending upon your creditworthiness.

• Personal loan interest rates depending upon the credit score-

The personal loan interest rates highly depend upon your credit score. It is always a risk for the lender to lend money to someone. So, if your credit score is high, then your interest rates will be low. The interest rates vary from 7% to 136% depending on your creditworthiness. 

The average interest rates percentage are:

For an excellent credit score: 7.25%

For a good credit score: 8% to 11.12%

For a fair credit score: 58.28% to 56%

For a poor credit score: 107.13%

For a bad credit score: 136.50%

Just by looking at the big difference between the interest rate of a bad credit score and a good credit score, it is evident that the total loan amount is highly associated with your credit score.

• Length of the loan -

If your terms of the loan are longer, then there is a higher risk that you might default it. In this case, the lender will charge a higher interest rate. But you reduce the repayment time and also successfully pay the monthly instalments, then there are chances that you will get low-interest rates.

• The total value of the loan -

If you have to apply for a huge loan, then your interest rates might increase. So, you must only apply for the required amount and also check multiple schemes before choosing anything. Or, you might face some problems in repaying it back.

• Financial conditions -

The lender inspects your monthly income before sanctioning a loan. Your financial status determines your capability of repaying the loan. If you are financially stable, then there are high chances of getting lower interest rates.

How to achieve a good credit score?

Personal loan eligibility and interest rates highly depend upon your credit score. If you want your loan application to get approved quickly, then you must have a good credit score. It is not difficult to improve credit score,

You can do it easily by using the following tips -

• Learn the method by which credit score is calculated and keeping a check on your credit score
• Make a plan on how you can boost your credit score 
• If there is any mistake in calculating your credit score, then you can rectify it and get it improved
• If you pay all your monthly instalments and bills on time, then your creditworthiness will automatically increase.

Conclusion:

These are the few tips that you must consider before applying for a loan. Make sure to boost your credit score to get the loan approved with low-interest rates and even if you can get a considerable value; you must apply only for the amount that is required. If you follow these tips well, then getting a personal loan at low-interest rates will be simple.

Must Read: The Do’s And Don’ts While Taking An Instant Personal Loan