Know About the Personal Loan Rate of Interest and the Factors Affecting It

In recent years, there has been a significant rise in the number of applicants for a personal loans. The reasons are the attractive personal loan rate of interest and the flexible repayment period. People have started to rely on this unsecured loan to meet their need for urgent funds, which was previously inconceivable.

The best part about personal loans is that they do not require any collateral. You simply have to check the eligibility criteria, present the relevant documentation, and choose your loan repayment tenure. It doesn’t matter if you are a salaried or self-employed individual; this loan is available to both of these categories. We understand that you might have numerous questions regarding how to apply for personal loan, the interest rate, EMI and all other aspects. So, without any further ado, let’s get started.

What are the Benefits of a Personal Loan?

Personal loans are in high demand these days. The reason behind it is the attractive interest rates and the convenience of the application. But overall, there are several advantages to a personal loan. Some of them are given below:

  • They are adaptable and may be used for a variety of purposes.
  • It is a wonderful strategy to improve your credit score.
  • A personal loan gets granted almost immediately.
  • Personal loans are easily obtained with minimal paperwork.
  • Personal loans do not require collateral.

What is the Interest Rate on a Personal Loan, and What are the Factors Affecting It?

The interest rate offered to you by your lending institution determines the amount you have to pay back to the lender along with the principal amount. Numerous lending organisations provide personal loan rates of interest at differing rates. It is because the interest rate on a personal loan is affected by several factors. So, before applying for one, do your research. The following is a list of factors influencing your personal loan rate of interest.

  • Income: Since a personal loan is unsecured, lenders will base their decision on your existing income. A higher-income will land you a lower interest rate and vice-a-versa.
  • Your company’s status: Lenders categorise firms into several groups, and these classifications influence your company’s position.
  • Relationship with the lending institution: The nature of your relationship with your bank and the DSA is also significant in receiving a low-interest rate on a personal loan. Your good relations with the DSA can help you get a special interest rate.
  • Credit and payment history: If you have applied for a personal loan and your payment history is bad, then there are chances that you may not get a personal loan. Many banks will not evaluate your profile, and if they do, you will be offered a higher rate of interest on your personal loan.

What are Personal Loan EMI and EMI Calculator?

EMI or Equated Monthly Instalment is a fixed monthly payment that a borrower makes to the lender to pay off the principal amount along with interest on a determined date. When you apply for personal loan, it is very important to compute the EMI to see if you will be able to pay the loan or not.

The personal loan EMI calculator is a custom online tool for calculating your EMI. When you add your loan amount, interest rate, and tenure, the online calculator will return you a value that is the monthly EMI that you have to pay to your lender every month. You may also change the loan period and amount to get different EMIs and decide which option is best for you.

How to Apply for a Personal Loan?

You can apply for a personal loan through two methods. One is the traditional offline method, where you can visit the nearest branch of your lender and apply for the loan manually. And the second option is to apply for a loan through an online method. The procedure for it is as follows:

  • Visit your lender’s website.
  • Open the application page.
  • Fill in all the necessary details.
  • Submit all the necessary documents.
  • Once your documents are submitted, they will go under review.
  • If your application gets approved, a person from the loan team will contact you, and you will receive your loan amount within some time.

We hope that now you will be able to apply for personal loan effortlessly. For a low personal loan rate of interest, we will recommend that you maintain a good credit score and not apply for multiple loans at the same time. Also, utilise the fantastic EMI calculator accessible on your lender’s website to see whether you will be able to repay your loan within the specified time frame.