A personal loan is a product that provides you the flexibility to purchase a car, consolidate debt, complete renovation of the house, or pay for school or college fees. And if your credit score is good you can get a good amount of loan.
If you are willing to get a personal loan then you must first check online and compare multiple lenders offering loans, at once. This should save you time. Rates of a personal loan can range from 3.49 percent to 35.99 percent. This is so because the lenders review a number of criteria while determining the personal loan interest rate.
- Credit score: A credit score or CIBIL score is a three-digit number that reflects the previous credit history of a borrower. Credit scores ranging between 300 and 850 are considered better scores. To maintain your credit score at a good level you should always pay your EMIs on time.
- Another factor is the amount of debt you have compared to your gross income, which is your debt-to-income ratio. You should keep in mind that debt does not include monthly expenses such as utilities or groceries, rather it includes loans, mortgages, leases, and credit cards. Most mortgage lenders look for debt-to-income ratios at or below 43 percent. For personal loans, a lender’s requirements may also vary. The much lower your ratio is, the higher your rates will be.
- Loan term and amount: the tenure of the loan may also influence your interest rate. Personal loans can vary from one to seven years. The longer the tenure is, the rates are usually higher than a shorter loan. The amount of money you are willing to borrow may also affect the interest rate. Lenders take a higher risk to provide you with a larger loan amount and hence they can charge you a higher interest rate. (personal loan interest rate)
Apply for an SBI personal loan. The bank presents personal loans with many offers.
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