A personal loan is the best type of credit product to utilise when facing a financial emergency since they have no set purpose, need little to no collateral or security, are promptly issued, and need little to nothing in terms of documents. Since a personal loan is an unsecured loan, the personal loan rate of interest is a bit higher than other types of loan, so, it would be prudent to borrow from a lender giving a comparatively cheaper rate of interest.
Lending institutions consider several variables before approving your personal loan, including the loan amount you require, your job history, credit score, ability to repay the loan, and more. Today we are going to provide you with information on interest on personal loans and how you can obtain a personal loan in Chandigarh with reduced interest rates.
What Is the Personal Loan Rate of Interest and What Are the Factors Affecting It?
You will be charged a percentage of the loan amount when you apply for a personal loan. This percentage represents the personal loan interest you must pay to your lender in addition to the principle. Variable interest rates are common with personal loans. The reason for the difference in the personal loan rate of interest is as follows:
- Income
- Payment and credit history
- Relationships with financial institutions
- Company status
- Work Stability
How to Calculate Personal loan Interest Rate?
Your personal loan interest rate can be calculated in two ways. One is the fixed interest rate method, and the second is the reducing balance method.
1) Fixed Interest Method
With this approach, the whole principal loan amount is charged interest at the current personal loan rate for the duration of the loan. Use the following formula to get your interest rate using this method:
Total Interest Payable = (Principal x Rate x Loan Term) / 100
EMI = (Principal＋Total Interest Payable) / Total Loan Tenure in Months
2) Reducing Balance Method
The outstanding principal balance is used to calculate the personal loan interest rate in this situation. It signifies that the interest on the outstanding balance is updated each time your EMI is paid. Use the calculation below to determine the EMI using this approach.
EMI is equal to [P x R x (1+R)N] / [(1+R)(N-1)].
Where,
E stands for EMI
P stands for the principal Loan amount
R stands for interest rate.
N represents the loan term in months.
How Can I Get a Low Interest on a Personal Loan in Chandigarh?
Here are some suggestions for obtaining a personal loan in Chandigarh with reduced interest rates:
Maintain a Solid Credit Score
A higher credit score often enables borrowers to get personal loans at reduced interest rates. A good credit score demonstrates sound financial management and increased creditworthiness. By paying off your bills and other obligations on time, maintaining a low credit usage rate, having a diverse mix of credit, and refraining from simultaneous loan queries with several lenders, you may keep your credit score high.
Keep a Good Repayment History
Try to make complete and timely credit card and loan EMI payments. This assists you in keeping up a strong repayment record, which will help you bargain with the lender for lower personal loan interest rates.
Keep an Eye Out for Unique Deals
During the festive season, many lenders offer special loan offers to their customers. The loan offers during this time have a comparatively low-interest rate, so you should look out for them and make the most of them.
Compare the Interest Rates Given by Various Lenders
It is usually a good idea to visit various lenders’ online websites and compare the various offers if you are found eligible for personal loans at numerous institutions. By comparing the interest rates provided by different lenders, you can, later on, compare them and choose the one that is available at the lowest rate to reduce your burden of EMI.
Have a Stable Employment History
Long-term stability in your job is beneficial for your eligibility for personal loans as well as for obtaining reduced interest rates. This is because it is thought that the applicants having steady employment will also have a steady income, making it less likely that they would fail on their loans. Try to stay employed for a long time in a stable position at any company where you work.
By now, this comprehensive guide should have given you a good understanding of how to get a Personal Loan in Chandigarh with the lowest interest rate. Personal loan interest rates can be high because of the lack of collateral, but that doesn’t mean that you can’t grab a good deal for yourself. All you have to do is perform good research and follow our tips.