12 March, 2025 | 11:00 IST
Loans can be a lifesaver when you need funds– whether it’s for a new car, a dream home, or just getting through a financial crunch. Not all loans are created equal, and some can end up costing you way more than you expected.
Personal loans, for example, are super popular because they don’t require collateral (unlike home or car loans). You just apply, get approved and you have cash in your account. The catch? Interest rates can be high, sometimes ridiculously so, depending on your credit score and the lender.
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Getting a personal loan is easy, but getting one with a low-interest rate? That takes some strategy. Lenders consider multiple factors before approving a loan, like your credit score, repayment history, job stability and even your employer’s reputation. Since personal loan interest rates are usually higher than home or car loans, it’s crucial to find ways to bring them down.
Moneycontrol offers personal loan offers up to Rs 50 lakhs from eight lenders, with interest rates starting at just 10.5% per annum.
Here are six ways to secure a personal loan at a lower interest rate:
1. Maintain a high credit score: A credit score of 750 or above significantly increases your chances of getting a loan at the lowest possible rate. To keep your score in top shape:
2. Build strong repayment history: Lenders trust borrowers with a clean repayment track record. Paying your credit card bills in full and clearing any existing loans on time improves your credibility. A good repayment history also strengthens your ability to negotiate a lower interest rate with banks.
3. Compare Interest rates and watch for seasonal offers: Don’t just settle for the first offer. Compare personal loan interest rates from multiple banks and NBFCs (Non-Banking Financial Company). Online financial marketplaces make this easy. Also, check with your existing lender, as they might offer lower rates to loyal customers. Festive seasons (especially Diwali) are a great time to apply, as many banks roll out special offers on personal loans.
ALSO READ: How to Compare Personal Loan Offers?
4. Maintain a stable job and good FOIR: Your Fixed Obligation to Income Ratio (FOIR), which compares your monthly debt obligations to your income, plays a key role in loan approval. A stable career means lower risk for lenders, which often translates to a better interest rate for you.
Banks prefer applicants who:
5. Employer’s reputation matters: If you work at an MNC or a well-known company, you’re in luck. Lenders see employees from reputed organisations as financially stable, which increases your chances of getting the lowest possible interest rate.
6. Consider pre-approved loan offers: Many banks offer pre-approved personal loans with competitive rates to existing customers with good financial records. If you receive one, check the terms carefully as it might be a great deal.
Applying for a personal loan seems simple, but a few missteps can cost you. Here are some common mistakes people make and how to avoid them:
1. Not checking eligibility criteria: Lenders have specific eligibility requirements based on income, age, employment status, and credit score. Applying without checking these can lead to instant rejection and may even lower your credit score.
2. Ignoring hidden charges: Interest rates aren’t the only costs involved. Many loans come with processing fees, late payment penalties, prepayment charges and foreclosure fees that borrowers overlook.
3. Overborrowing: It is tempting to borrow more than you need, but that means higher EMIs and more interest paid over time. Lenders also check your debt-to-income ratio – if it’s too high, you might struggle with future loans.
4. Missing payments: Skipping or delaying EMI payments not only hurts your credit score but also leads to late payment fees and increased interest. A poor repayment record can make it harder to get loans in the future.
Getting a personal loan at a low-interest rate is possible with smart planning. A good credit score, timely repayments and comparing offers can help you secure the best deal. Through Moneycontrol’s online platform, you can access personal loan offers up to Rs 50 lakhs from eight lenders, with interest rates starting at 10.5% per annum.
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