Personal Loans are favoured by many for their quick application process and swift disbursement. However, there is a notion around them that the repayment of the loan can be expensive because of high interest rates. The interest rate on the loan is determined by two things – absence of collaterals and past financial performance of the borrower. These two factors contribute towards the final interest rate of the personal loan. Let us evaluate the points that enable us to avail the cheapest interest rate on personal loans:
1. Do extensive research before borrowing any loan
Check the lender’s website, read their terms and conditions, loan repayment options etc. If you want to check your eligibility for the loan, you can also do so by using the personal loan eligibility calculator online. You can see the interest rates, compare and decide what suits you best. If the website information is not adequate for you, you can always get in touch with the financial organization’s contact centre for more details/information.
2. Check your credit sore before you decide to get a loan
A good credit history will work in your favour when it comes to deciding the interest rate on your loan.
3. Do a thorough check of your credit report
As there could be a possibility of it having errors or wrong entries that have not been rectified yet. Also, your financial information may not update and chances of payments made by you towards a loan or a credit card may not have been updated with the credit bureau. A closed card or loan could be still shown as active. An active loan could be shown as closed. So, do all the checks closely even if it takes time because any miscalculation could hamper your CIBIL score.
4. Check for hidden charges
This should be your priority. During the process, we get so engrossed in getting the perfect interest rate that we entirely ignore other important factors. Charges like processing fee, partial payment charges, foreclosure charges, late fee etc. also add to the overall cost of a loan. Taking these charges into account is as important as the interest rate itself. With Finserv MARKETS, your Personal Loan application comes with zero foreclosure charges and provides you the freedom to repay your loan per your financial convenience.
How are Personal Loan Interest Rates Calculated?
When calculating personal loan interest rates, make sure that you use the basic annual interest rate and not the comparison rate to get accurate numbers. The comparison rate takes into account the fees and charges as well as interest, so if you use it, you will get a higher amount of interest than you should. You can take the help of an interest calculator to work out how much interest you’re paying or, if you’d rather do it by hand, here’s how:
Start by dividing your interest rate by the number of payments you’ll make in a year (interest rates are expressed annually). So, for example, if you’re making monthly payments, divide it by 12.
Multiply the amount by the balance of your loan, which for the first payment, will be your total principal amount.
This gives you the amount of interest you that is paid by you in the first month.
So for example, on a personal loan of Rs.30,000 over a period of 6 years at 8.40% p.a. and making monthly repayments:
Now that you’ve begun to pay off your principal, to work out the interest you pay in the following months, you need to first calculate your new balance. So:
Without the interest, you just calculated from the amount you repaid. You get the amount that you have paid off the loan principal.
Take this amount away from the original principal amount you’ll get a new balance of your loan.
Whenever you apply for a personal loan you always look for interest rates & charges. At Finserv MARKETS, you get the most attractive Bajaj Finserv personal loan interest rates with no hidden charges.
Looking for a loan with low EMI? Finserv MARKETS is where you should be! Affordable interest rates, flexible repayment, instant application processing are just a few features from our long list of benefits. What’s more? With us, your personal loan application can be approved under just 3 minutes and the loan amount can be credited to your bank account within 24 hours!
“Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.”