If you are looking for some urgent cash, you can consider availing a personal loan. It’s an easy, simple and multipurpose loan that can help you meet all your financial needs. However, when availing a loan, you must be cautious about the interest rates. Today, many lenders are offering instant personal loan at competitive interest rates. You must take some time to conduct your research and find out the one offering you the best deal. This will ensure you that you do not end up paying huge amount as interest. You can also negotiate a better interest rate with some expert tips.

Read on to discover some of the amazing ways to get a personal loan at an affordable interest rate.

Tips To Get a Personal Loan at Affordable Interest Rate

1. Maintain a high credit score

This is the best way to ensure that you get the most affordable interest rate on your loan. Always pay your loan EMIs on time and never over-utilise your credit eligibility. Make sure to be regular on all your payments. Your good credit behaviour establishes you as a responsible borrower and the credit bureau assigns you a high credit score. This helps the lender see you as a low-risk borrower because of this they offer you the loan at a lower interest rate.

Regularly check your credit report and see that there is no misreporting or mistake of any kind and get any problem fixed as soon as possible.  If your credit score is low, you can work towards improving it by being regular on your payments and closing your existing debt accounts.

2. Choose an app-based loan

A personal loan app is the modern, new age way to get a good deal on interest rate. Most conventional loan providers have very high operational costs because of which they charge very high interest rates and loan processing fees. You must read the fine print of the term and conditions to discover all costs associated with the loan.

On the other hand, if you take a loan for personal loan from an app, you will get much lower processing charges and interest rate because app based lender have much lower operational costs than any conventional lender. They will pass on this low operational cost benefit to their borrowers. You can easily download a loan app and compare the interest rates.

3. Get a co-borrower for your loan

You can get a better deal on your loan interest rate by getting a co-borrower. A co-borrower shares your responsibility of repaying the loan to the lender. So, the risk associated with your loan account gets reduced and the lender might feel comfortable offering you a better deal on the interest rate.

While getting a co-borrower is a good idea, make sure that your co-borrower has a good credit score and they have a stable income. Also, note that a lapse in the payment of your personal loan EMI will impact the credit scores of both the primary and secondary borrower. 

4. Adjust the loan duration

Building upon the same risk mitigation principle from above, you can also consider the loan duration to be a key factor in how much interest rate will be charged by the lender. Not many people realise this but a same loan amount when taken for a shorter duration can be available at lower interest rate because shorter durations also reduce the overall risk factor whereas longer durations have higher interest rates because of higher risk factor. 

Also, having a longer tenure means you will end up paying more interest over the course of time. So, it is important to be very careful when choosing the tenure of your loan. A shorter tenure means higher EMI but lower interest pay out, and a longer tenure means lower EMI but higher interest pay out. 

5. Adjust the loan amount

In a number of cases, the lenders grade their interest rates to match with the amount to be borrowed. The higher is the loan amount, the higher will be the interest rate. Lower amount loans obviously come with lower interest rates. While there is no sure shot way to know about this grading in case of conventional lenders, an instant personal loan app will automatically adjust interest rate changes in the loan application overview? So you should adjust the loan amount in the app to see if a better interest rate is available before you click the final loan application button. 

6. Wait for festive or promotional offers

This is also an effective way to get good interest rate on your loan, especially if you can wait for some time. Many loan apps will bring in special offers and discounts on processing fees as well as lower interest rates during the festival seasons to boost their lending portfolio. If you think you do not have an urgent need of a personal loan, you can wait till the company comes up with a promotional offer where they are offering lower than usual interest rates and that will save you a lot of extra money that would have otherwise been paid as interest.  

7. Employees can look for corporate deals

People who are working with the government of Indian or large corporate firms can expect to get really good deals on personal loan because of two key factors. First since these companies are fairly reliable in paying the salaries of their employees on time, the lenders consider their employees to be low risk borrowers and thus offer them loans at low interest rate loans. Secondly since the number of employees with these firms is also very large, the lenders also run personal loan promotional deals for these employees as it allows them to get large volumes of business at one go.  

Conclusion

Finally, it is very important to build long term relationship with the lender. This means that if you borrow from the same personal loan app as and when you have a loan requirement, you will get better deals. More importantly, you should always maintain a stellar track record for loan repayment. When you build relationships with lenders, they develop strong confidence that you are going to pay back what you borrow. As a result, they will offer you their best deals in all aspects of the loan transaction.