Some of us have thought about taking a loan at some point in our lives – whether it’s for purchasing our dream car or that villa or just going on that long-due vacation. For each of these there are different types of loans available and these can help us take a step closer to our dream.
While Home Loans and car loans, as the names suggest, provide you with finances to purchase a home or a car, a Personal Loan is slightly different.
You can Apply for Personal Loan, as indicated by the name, for any personal reason. Unlike the car loan or the Home Loan, there is no specific purpose defined for taking a Personal Loan.
You can take it for a vacation, for a renovation, for purchasing something big or paying for a wedding. Personal Loans are highly versatile and flexible. When you take a Personal Loan and it is approved, you will get the money all at once and you can repay it on a monthly basis until your loan term is over.
However, the catch is – Personal Loans are unsecured loans and unlike the secured loans, the interest rates are typically much higher. In addition, the rate of the Personal Loan is dependent on certain factors. So if you are considering taking a Personal Loan, here are the factors that could affect your interest rate:
The better the company you work for is; the better are your chances to get a low-interest Personal Loan. When you work for a reputed firm that has a stable foothold in the market and is renowned, the bank will distinguish you as a stable employee and capable of paying back the loan. They will then rest assured that the money is in safe hands.
Did you know that your credit score determines how potentially risky you are to the bank? A low credit score indicates that you have the potential to cause losses to the bank. Plain and simple, a credit score simply is a simple marker of whether you can repay your loan and whether you have successfully repaid your past loans on time.
Late payments, defaults can bring down your credit score and make you a risky lender for the bank. The credit score scale is from 300-900 and if yours is 700and above, it is considered healthy. So the higher your credit score, the lower will be your Personal Loan rate.
Unfair as it may sound, but a higher income usually implies to the bank that you are a safe lender and your income is steady enough to pay back the loan. Simply put, the more your income, the more you can afford to pay back the loan.
For instance, currently in the industry, if you earn Rs. 50,000, the bank will likely give you a Personal Loan at the rate of 16%-20%. However, if your income falls in the bracket of Rs. 50,000-Rs. 1,00,000, you can easily negotiate with the bank to give you an interest of merely 14%!
You can imagine how the rate will decrease as your income increases. In fact, industry trends have shown that people who earn more than a lakh can sometimes secure a Personal Loan with interest rates as low as 12%.
Loyalty is crucial, especially when it comes to taking a Personal Loan. So if you have been loyal to a particular bank and all your transactions (savings etc.) have been with that bank, chances are, they will try and reduce the rates of interest of your Personal Loan. It is likely that they would offer you better rates because they would not want to lose a valued customer. Hence, it is always better to apply for a Personal Loan from a bank where you usually have accounts.
You can either apply for a Personal Loan online or you can meet bank officials in person and talk about the loan. It all depends on your comfort level and thanks to technology, a loan whether it is a Yes Bank Personal Loan or that ofered by any other bank, you can get the loan in just a few simple clicks! You can just visit the bank’s site, go through the important information and benefits and apply for the loan.
To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 70+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.