So, you’re looking for a personal loan. Do you know there are now plenty of private lenders out there, claiming to be the best? And more so, all of them also claim to offer the lowest rates of interest.
However, the truth of the matter is that these private lenders are not always economical. First of all, when you try to get the lowest personal loan rates it depends on the type of loan you’re seeking. Yes, there are further classifications of personal loans.
Let’s say, you know that you want to take out a short-term installment loan from a private lender. Of course, the principal amount of the loan and the term would be the primary factors affecting your interest rate. But, there are other factors that lenders don’t want you to know.
Here’s how you can bid the lowest personal loan rate.
Apply with Multiple Lenders
Did you know fintech companies and money lending networks go hand in hand? Well, now you know. The benefit of applying through a lending network, however, is that you can apply with multiple lenders.
Thankfully, these networks list catalogs of lenders where you can actually compare the schemes from different lenders. And most of these lenders are fintech companies. So, you can also benefit from a paperless application process. In short, you can apply with multiple lenders and increase your chances of bidding the lowest rates.
Keep Track of Your Credit Score
Although there are bad credit loans available, they come with a higher interest rate. The thing is, a bad credit score indicates a risky investment. And just to be on the safer side, lenders charge a higher rate of interest.
However, if you have a good credit score, your chances of getting a lower rate increase manifolds. In addition to this, if you also have a good credit history, you can expect a further lower rate of interest.
Create Your Portfolio
Another tested way to get a lower interest rate is by creating a good portfolio. Your savings and your investments are a good sign of healthy finances. Subsequently, reducing the risk for the lenders.
Your savings and investments can be used to repay the lender. Regardless of whether you place them in collateral or not.
Read More: 5 Good Reasons To Apply For A Personal Loan
Look for Reducing Rate of Interest
A common mistake that most borrowers tend to make is assuming the interest rate to be flat. If you didn’t know before, a flat rate of interest can end you up paying a lot more. On the other hand, reducing interest rate can save you a lot of money.
To put this into perspective, paying a flat rate of interest would mean you pay a pre-decided amount as interest. Whereas, in a reducing rate of interest, the principle also reduces along. Thus, reducing the EMIs that you pay. In short, even if you have a lower flat rate of interest, it does not guarantee a lower repayment.
Knowing where to look is only the first step in search of financial security. To be successful at it, you need careful planning and increase your savings.
